LOTUS CORONAVIRUS UPDATE (09.07)

ECONOMY

Summer Economic Update for UK

On 8 July, Rishi Sunak, the chancellor, delivered a ‘summer economic update’ with an announcement of an extra £30 billion to boost the economy. He promised a three-point plan to support jobs, create jobs and to help people find jobs.

Measures which should also assist the travel, tourism and hospitality sectors include:

• A ‘Kick Start’ scheme. The government will pay employers to create jobs for 16-24-year-olds
• $4 billion in the form of a six month VAT reduction from 20 per cent to 5 per cent, which aims to help more than 100,000 businesses. Pubs, accommodation, attractions, theatres, theme parks, cinemas and restaurants will be eligible.
• A series of incentive payments to businesses to bring furloughed workers back to work including a Jobs Retention Bonus of £1,000 to employers for every furloughed worker brought back to work who is retained at least until January
• An ‘Eat Out to Help Out’ scheme to encourage people to eat out with a 50% discount offer of up to £10 per head on meals in pubs and restaurants on Mondays-Wednesdays throughout August.

But Sunak insisted the government’s Job retention Scheme “cannot and should not go on” beyond October.

Joss Croft, chief executive of inbound tourism association UKinbound, welcomed the cut in VAT and the Job Retention Bonus Scheme, but called for more support for the sector.

Croft said: “The Chancellor’s economic recovery plan clearly recognises the value of hospitality and tourism.

“The Job Retention Bonus Scheme will also help tourism and hospitality businesses, but only those that survive into next year.

“These measures will not help the many businesses involved in inbound tourism who are on the brink. Longer-term support will still be required for these businesses.”

Clive Wratten, chief executive of the Business Travel Association said: “The government has still not laid out support plans for the meetings and events industry, although Prime Minister Boris Johnson has indicated there will be an announcement later this week.”

ABTA said: "This is good news for domestic tourism, but the lack of backing for outbound tourism represents a missed opportunity, as this is a sector that directly provides 220,000 jobs across the UK and is in urgent need of tailored support."We shall continue to press for additional support measures for the travel and tourism industry in the coming weeks."

ABTA has already written to the Chancellor arguing for the need for an extension to the furlough arrangement and salary support on a sector-by-sector basis.

In an interview with Travel Weekly, Mark Tanzer CEO of ABTA said: “We’re heading in the right direction, but it’s a very uncertain future. There is an issue of consumer confidence. I don’t think it’s just to do with quarantine. There is wariness about travel within the UK, let alone overseas, and the industry needs to recognise that.

“You see countries where Covid had died down and comes back, and that will create nervousness. That is probably the biggest uncertainty.”

Garry Young, National Institute of Economic and Social Research said: “The measures could precipitate a rapid increase in unemployment. The incentives offered to employers look too small to be effective.”Economy overview

The Economist reported that output, which shrank by around a quarter over the course of March and April, almost certainly began to expand again in May, but the pace and the shape of the recovery remain contentious. Real-time data points to a rapid bounce but other measures point to a less rosy outcome with visits to workplaces and shops slower in Britain than in other rich economies.

Consumer Confidence

UK consumer confidence is improving but remains fragile with few signs of stability, according to the latest GfK consumer confidence index. For the period 18-26 June, the index improved by three percentage points to -27, while the major purchase index improved to -25 from -32.

Job Crisis

The Recruitment & Employment Confederation has warned that a jobs crisis is already underway in the UK. The monthly survey shows that demand for staff continued to fall in June, while the supply of available workers rose to its highest level for more than 10 years.

According to EY ITEM Club think tank, the unemployment rate will rise from 3.9 per cent to 7.5 per cent over the next three months, the OECD has said that unemployment could reach 15 per cent if there is a second wave.

Refunds

MoneySavingExpert.com has ranked travel firms and airlines according to how consumers rated their handling of refunds for cancelled trips during the Covid-19 pandemic reported Travel Weekly.

Travel Counsellors came out on top with a net score of +84%, closely followed by Trailfinders (+81%) and both Jet2 brands (+79%, +77%), all of which have shown a “big improvement” since the last time MSE ran the survey in May.

Less than a third of customers who had bookings cancelled had received a full refund.

ABTA’s Head of Finance John De Vial has said that consumers who accepted refund credit notes with a 31 July expiry date should receive cash refunds now regardless of whether suppliers have refunded travel businesses.

 

TRAVEL RESTRICTIONS EASED

The UK government finally confirmed the list of countries where travel restrictions have been relaxed on Friday 3 July.

The government revealed the 59 countries it deemed it was no longer necessary to impose a 14-day quarantine for returning travellers in a tweet from the Secretary of State for Transport.

The Foreign and Commonwealth Office (FCO) also updated its global advisory against 'all but essential' international travel to exempt 67 destinations that it believes no longer pose an unacceptably high risk of Covid-19 from 4 July. 

The relaxations only applied to those who are arriving back to England. They didn't apply to anyone arriving back to Scotland, Wales or Northern Ireland.

Under the new scheme, countries have been classed as either green, amber or red, depending on their levels of coronavirus.

However, the travel industry immediately called for one definitive list of where British people can travel amid criticism that the Government's travel guidance caused 'utter confusion' – as many of the countries on the list were not open to British tourists without any restrictions. Brits can only enter 25 countries without being quarantined.  The list of countries dubbed safe by the British government includes almost all of Europe, with the exception of Portugal and Sweden, along with a dozen other countries, including Australia, South Korea and Vietnam.

BA, easyJet and Ryanair dropped their legal action against the government over the introduction of the two-week quarantine period.

Joss Croft, chief executive of UKInbound, which represents the UK’s international tourism sector, told The Financial Times that the lifting of quarantine measures had come too late and that most tourism businesses considered this year “a write-off”. “A lot of people will have already decided where they are going and it won’t be the UK this year. There is only a very short time for [companies] to get money through their books,” he said.

Inbound tourism, which contributed more than £28 billion to the economy in 2019 sees only 24% of visits in Q4 and has most international visitors arriving in the summer months.

Advantage responded to the announcements by saying to Travelmole that while it was a “welcome move forward and will definitely help with pent up demand for school holidays, it was not enough to salvage the loss in revenue incurred over the past few months.”

On Wednesday 8 July the Scottish Government approved almost all of the 'air bridge' travel destinations set out by UK ministers.

From Friday July 10, Scots can travel to 57 other countries without having to quarantine when they return home.But Spain, the Spanish islands and Serbia have been omitted from the list due to concerns about their levels of coronavirus.

Scottish travel agents' trade body SPAA president Joanne Dooey said: "Spain is such a popular and accessible destination for Scottish travellers, and this is a huge blow to those who are keen to travel and to our members who have clients wanting to book now.”

Following the announcements EasyJet Holidays plans to re-start its programme on 1 August.

 

AVIATION

There has been a welcome increase in flight capacity to the Middle East with Emirates putting its Airbus A380 back on the HRW Dubai route.

Abu Dhabi-based Etihad Airways will expand its network to serve 58 destinations during July and August, including several major global gateways, as it moves towards nearly 45 per cent of its pre-Covid capacity.

Air New Zealand

Air New Zealand has suspended new bookings on international services into the country at the request of the New Zealand government. The temporary hold will initially last three weeks, enabling New Zealand to provide quarantine accommodation for inbound passengers for the required 14-day period. The airline’s domestic flights and outbound services from New Zealand are not affected by the restrictions.

Ryanair

Unions have secured agreements with Ryanair which will result in no job losses among cabin crew and pilots. Staff will be forced to take temporary pay cuts of up to 20%.

 

CRUISE

FCO advises against cruise ship travel following EU Guidance

Travel Weekly has reported on Thursday the UK government has issued advice against cruise ship travel.

The hardened advice follows on from FCO guidance against over-70s and those with existing health conditions taking cruises, which was issued in March as the Covid-19 pandemic hit Europe.

The government updated its advice on Thursday, saying: “The Foreign & Commonwealth Office advises against cruise ship travel at this time.

“This is due to the ongoing pandemic and is based on medical advice from Public Health England.

“The government will continue to review its cruise ship travel advice based on the latest medical advice.”

This follows on from last week’s publication of the EU Healthy gateways Covid-19 Guidance which includes recommendations for shorter itineraries, health screening before embarkation; guests segregated by age; and keeping groups small, as well as reducing numbers on ships and the end to meal buffets.

The Mail Online reported the public health advice for cruise lines which recommended how to get the cruise industry sailing again.

Response from the industry included Clia UK and Ireland who said: “We have noted the advisory issued today.

“The health and safety of guests and crew is an absolute priority for our member lines.

“Since the voluntary suspension of operations, we have been working collaboratively with the government on the road map to resumption involving a ‘door to door’ strategy – from the time of booking through to the passengers’ return home – with enhanced health protocols.

“We look forward to completing this planning exercise with government and for the advice to be updated.”

Carnival UK president Simon Palethorpe said: “We acknowledge the FCO’s guidance and P&O Cruises had already extended the pause in operations for all sailings up to October 15, 2020 and Cunard had extended the pause in operations until November 2020.

“Our current focus is to work in partnership with public health agencies at the highest level as well as Department for Transport; EU Healthy Gateways and Clia, the industry governing body.

“We will follow applicable guidelines to further enhance our already stringent measures to keep our guests and crew healthy and well and we will not resume sailings on either of our brands until this framework is in place. This will include rigorous protocols pre-boarding, on ship and in the destinations we visit.

P&O

P&O Cruises has sold the Oceana after 18 years of service as part of its shift to larger, more efficient ships.

The two ships joining the P&O fleet in the next two years are 5,200-guest giants powered by greener liquefied natural gas fuel.

The first of those new vessels, the Iona, was due to make her debut this month, but she is still being fitted out in Bremerhaven, Germany, for delivery late this year, with a sister ship to follow in 2022. The Iona will be the largest ship serving Britain.

Princess Cruises

Princess Cruises has redeployed three of its ships for summer 2021, which has led to some additional cancellations.

Hurtigruten

Travel Weekly reports that Hurtigruten plans to bring 14 of its 16 ships back into service by the end of September as it makes its ex-UK debut.

A series of new short-break itineraries around the British Isles will depart from Portsmouth, Liverpool and Glasgow on hybrid battery-powered ship Roald Amundsen.

 

ACCOMMODATION

Travelodge has begun a phased reopening of its hotels from 6 July with a new set of cleaning standards and protocols in place.

The Times reported the opening of Whitbread hotels which expects to have reopened most of its hotels and pub restaurants by the end of the month.

The FTSE 100 company, which owns the Premier Inn and Beefeater brands, said that it expected mostly domestic tourism and there was already good demand especially for seafront sites and that it expected corporate travel to return in September.

 

LUXURY

Vogue Business has reported that luxury hubs in Europe will see a slow return to tourism.

Safety is the top concern for tourists across the globe. A recent report by Google Trends Asia and popular APAC booking platform Trip.com showed that the most popular search queries related to tourism tended to be about the risks and current restrictions on travelling. McKinsey data from late April showed that most Chinese residents are not thinking about taking a trip until September and, when they do, it is likely to be within China.

Survey data suggests APAC customers are looking for safer, shorter journeys over the next few months with the luxury destinations of Paris, London and Milan not on the list for most.

 

DESTINATIONS

Portugal

Luis Araujo, President of Turismo de Portugal, expressed extreme disappointment at Portugal being left off the UK’s approved list of destinations and called the move ‘unjust and penalising.’

Portugal is now in talks with the UK over a quarantine-free travel corridor between the two countries.

Portugal has been broadly praised for its response to the coronavirus crisis. At the time of the UK’s travel corridor announcement, the country also had a significantly lower number of cases per 100,000 people than the UK.

However, restrictions were recently reintroduced in Lisbon following a fresh spike in infection, and there has also been another localised outbreak in the Algarve, a popular holiday destination for Brits.

The UK government will review its first travel corridor announcement by 27 July.

Spain

Spain is to enforce a second regional lockdown since it began easing across the country. Over 70,000 people in La Marina will be barred from leaving the area. The region has reported an outbreak of 106 new virus cases, which have been linked to "two or three bars" in the port town of Burela. It comes after Catalan authorities in El Segria imposed the first local lockdown after a spike in cases. There is also a lockdown in the city of Lleida west of Barcelona. Wearing a face mask in public spaces in Catalonia is now compulsory.

A royal decree to wear face masks has been issued for hotels, restaurants and museums. Failure to comply will result in a fine.

Israel

Israel’s public health director has quit amid a spike in new cases. The resignation comes a day after the government imposed a series of restrictions, including the closure of bars, gyms and event halls.

Australia

Melbourne and the northern part of Victoria have gone into lockdown for a further six weeks after a wave of new infections.

Germany

The German government expects the country’s economy to start growing in Q4, after an economic decline of 6.3 per cent for the full year, which would be the worst contraction since World War Two.

Austria

Austria’s government has announced travel restrictions for fellow EU members Romania and Bulgaria after a spike in the number of cases in both countries. Greece has also expressed concern about imported cases from the Balkans.

Italy

Italy has suspended flights from Bangladesh and blocked 150 Bangladeshis from entering the country after 36 people who arrived in Rome on board a flight tested positive for coronavirus.

France

The new prime minister of France has said that in the event of a further coronavirus outbreak, lockdowns would be targeted and regional and not nationwide.

Hong Kong

Travelmole has reported that US carriers have halted flights to Hong Kong due to new testing requirements for inbound flight crews. Hong Kong's Centre for Health Protection said foreign flight crews are now required to take a deep throat saliva test. Anyone refusing to be tested could be fined or even be jailed.

Caribbean

Nineteen Caribbean destinations included in Covid-19 Travel Corridors

Anguilla, Antigua and Barbuda, Aruba, the Bahamas, Barbados, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Curacao, Dominica, Guadaloupe, Grenada, Montserrat, St. Barts, St Kitts and Nevis, St Lucia, Trinidad and Tobago and the Turks and Caicos Islands have all been included in the UK Government’s initial list of countries exempt from quarantine restrictions on return to the UK.

The list reflects many favourite UK holiday destinations, that reopened their borders to tourism on 1 July 2020. New hygiene and safety protocols are specific to the destination but include Health Affidavits, temperature or Covid-19 checks on arrival and extensive sanitisation, minimum contact and social distancing in airports. Hotel, restaurant and activity operators have implemented a range of measures including express check in/out, social distancing in restaurants, on the beach and in the pool and disinfection of equipment.

Tunisia

Tunisia has reclassified the UK as a "green" country and has lifted travel restrictions on UK arrivals.

 

JOB LOSSES & BUSINESS CLOSURES

Funway Holidays

The operator, which specialised in breaks to the US, Mexico and the Caribbean, is to cease trading on September 30 after 27 years as a result of the Covid-19 pandemic.

Reach plc

The owner of the Mirror and Express newspapers is cutting 550 jobs after its revenues fell during the lockdown.

ACTE

Thirty-two years after its founding, the Association of Corporate Travel Executives has ceased operations and will file for Chapter 7 bankruptcy, according to a notice on the association's website.

Uber

Uber has announced further job cuts to reduce costs. The latest announcement affects 3,000 more jobs, bringing the total reductions to a quarter of the workforce when added to the 3,700 layoffs announced earlier this month. In addition, the company is closing or consolidating more than 40 offices over the next year and will be ceasing operations in some business units, such as its artificial intelligence lab. The move will not impact Uber’s drivers, who are considered self-employed independent contractors.

United Airlines

Skift has reported that United Airlines soon plans to issue furlough and layoff notices to roughly 36,000 employees, including pilots, flight attendants, customer service agents and maintenance workers, warning them they could lose their jobs by early October, when federal funding for paycheck supports expires, the carrier told workers on Wednesday.

The Economist reports that The Centre for Retail Research, a consultancy, estimates that almost 50,000 jobs have already been lost in retail this year.

 

CONSUMER SENTIMENT

Boris Wrong on lockdown

The Sunday Mirror reported on a consumer survey poll conducted by Redfield & Wilton and found that:

• Six In 10 believe the PM is relaxing lockdown to early
•  51% have abandoned their holidays this year and more than half are not planning to book any holidays this year
• 45% have no confidence in the PM’s steps to prevent a second wave
• 25% intend to have a UK staycation
• 17% plan to go abroad

In addition, the paper published a finding from Booking Tek found that nearly three-quarters fear eating at restaurants and 43% intend to visit restaurants less often.

IATA

International airline body IATA research suggests significant levels of consumer concern about the Covid-risks of flying despite industry efforts to address travellers’ fears.

Consumer research in the UK, Germany, France and the US, found three out of five respondents (58%) had avoided air travel and one-third (33%) would avoid flying in future to avoid catching the virus.

The respondents had all flown in the past 12 months.

The survey found two-thirds (65%) of consumers concerned about ‘sitting next to someone who might be infected’, and two in five (42%) concerned about ‘using toilets’, with almost as many (37%) fearful of ‘breathing the air on the plane’.

The top concerns at airports were ‘being in a crowded bus/train to the aircraft’ (59%), ‘queuing at check-in/security/border control or boarding’ (42%), and ‘using airport toilets’ (38%).

Asked to rank the measures that would make them feel safer, 37% cited Covid-19 screening at airports, 34% said mandatory face masks and 33% social distancing on aircraft.

Approximately two in five passengers were willing to undergo temperature checks at airports (43%), wear a mask during travel (42%) or take a Covid-19 test before travel (39%).

Europe views UK tourists as pariahs

The Times reported on Thursday that many people in Europe want British holidaymakers to ‘stay away,’ according to a YouGov poll.

It found that people in France, Spain, Italy and Germany were more opposed to British tourists than those from any other European country. Only visitors from China and the United States were less welcome than Britons because of the high coronavirus infection rate.

The Spanish were particularly opposed, with 61 per cent wanting a ban on Britons entering the country.

the YouGov poll also found that the vast majority of Britons were not interested in travelling abroad anyway: only 21 per cent of those questioned said they “would be willing to consider” visiting France and Spain this summer, with 18 per cent opting for Germany and 17 per cent for Italy.

The pandemic had “clearly made people reluctant to travel abroad”, the researchers said. “The vast majority of people who might normally consider going on holiday are refusing to do so specifically because of coronavirus.”

 

CONCLUSIONS

Whilst Governments across Europe are keen to kickstart economies, they are being thwarted by consumer confidence and ongoing regionalised outbreaks of the Covid-19 virus. Even though the green light to travel has been given to many of the UK’s favourite destinations, enthusiasm to book has been dampened by the convoluted and nuanced official advice.

Brands working in this environment need to provide inspiration and aspiration together with reassurance on safety protocols, even if resources don’t allow a full return to normal activity. Right now, it is more important than ever to listen to and have an accurate gauge on consumer and media sentiment. As freelance travel journalist Richard Mellor said in a newsletter this week “should the scenario with those 25 countries remain unchanged for a while, that ought to breed confidence in customers, in advertisers and thus in travel editors.”