A Big Jump In Holiday Booking Seen, As The Government Relaxes Global Travel Restrictions

Summary

• Tour operators see a 50 percent in travel bookings
• Relaxation of quarantine rules and air bridge agreements with key European countries have spurred demand
• A closer look at the Tui Group

Several tours and travel operators in the United Kingdom have reported that they have been witnessing a massive surge in online queries for holidays since the UK government has allowed overseas flights from July 6 next month. The tour operators have also reported a 50 per cent increase in bookings for the week ending 26^th June compared to a week ago, while the price comparison searches and destination searches have seen a meteoric rise in comparison to what they were in early March this year. While this surge in demand from holidaymakers has definitely put a smile on the faces of the operators, it also brings to the forefront the massive pent-up demand that exists in the country for leisure and travel. Not to forget that this is the summer season going on, which witnesses demand rush every year. This is in sharp contrast to what many people had believed that there will be a continued drop in the fortunes of this industry as people will now start to restrict their non-essential spending and stick to the most basic ones.

The travel and tourism industry is one of the major employers in the United Kingdom. This industry not just has extensive business relations with the rest of the world while sending British tourists to other countries, but it also receives millions of foreign tourists into the United Kingdom who bring in millions of pounds worth of revenues each year. Since the past few months, after the pandemic broke out and the lockdown was imposed in the UK, citizens have been locked up in their houses with no scope for leisure and recreation. The lockdown, while protecting the people from contacting the viral infection, would have certainly had an adverse impact on them psychologically and a holiday would certainly provide them with a release. The sudden pickup in demand activity would also bring a sigh of relief to the businesses which are dependent on the travel and tourism industry, like the restaurants, hotels and resorts. However, the greatest impact will be felt by the airline industry who have been counting losses in billions since the lockdown was imposed. Now, with more and more people travelling, and these industries seeing a rise in business activity, a greater number of people will come out of unemployment, and it will be a major boost to the economic revival efforts in the country. It will also provide a major push to the country’s efforts to kickstart international trade as business travelers will also be able to avail of this opportunity to further their business relations which had slid into dormancy during the past few months.

Two major factors that have contributed to this spike in travel demand are - governments' relaxation of the quarantine rules for air travelers, and the air bridges scheme. While the relaxed quarantine rules will ensure that not all who enter the United Kingdom will be subjected to compulsory 14-day quarantine, the air bridges agreement allows British citizens to travel to partner countries without any restriction. Currently, Spain and Greece are two most popular destinations in Europe with the British travelers. However, there have also been queries for holidays to Bali in Indonesia and New York in the United States of America. To deal with this surge in demand, the British The Joint Biosecurity Centre and Public Health England will be ranking different countries as per the prevailing risk of contracting the virus and would be colour coding each of them as green, amber or red. While the Britons would be able to freely travel to countries coded as green and amber, travel to countries coded as red would be restricted. The government will provide a full list of these countries to the parliament on Monday, 29^th of June, which will be followed up with full details on Wednesday. The current restrictions on non-essential foreign travel that had been issued by the foreign office is coming to an end on the 6^th of July 2020.

The travel & tourism and the airlines industries were both blamed for rapidly spreading the coronavirus pandemic across the world. Chinese tourists were blamed for bringing the pandemic to popular tourist destinations in Italy and Spain from where it rapidly spread to the rest of the continent. While previous pandemics were much slower to spread across the world, the presently evolved airline industry has been held responsible for the high spread. It is thus imperative that authorities across the world are apprehensive about resuming operations of both these industries, fearing a resurgence of infections.

Let us now take a closer look at the Tui Group, a leading travel company in the UK.

Tui Group Plc (LON:TUI) is a British-German travel and tours operating company. With a dual listing on the London Stock Exchange and the Frankfurt Stock Exchange, the company is the largest leisure, travel, and tours company in the world. Tui Group’s business segments include travel agencies, hotels, cruise ships, airlines as well as retail stores. The company also owns five airlines in Europe, along with several popular hotel brands and cruise lines. UK & Ireland constitute for the company’s second largest market.

According to latest company updates, the group is all set to resume operations beginning early July this year. It will be resuming more than 40 flights every week from UK during July 11 and 24, which will rise further gradually till August this year. The shares of the company (LON:TUI) traded at GBX 380.70, up by 5.20 percent on June 29 at 2.19 PM. Its 52 week low/high range was recorded at 254.00 / 1,081.50.

In sum, the stimulus measures of bounce back schemes and the furloughing scheme have ensured that many people have not lost their jobs, have not been displaced and would readily join work, while travel businesses would have sufficient working capital to resume operations quickly. However, the true state of affairs of the industry will improve only when an effective vaccine is developed, and most of the population in the country receives the protective dose. The UK has already seen slight resurgence in business activity across the retail sector, since the first phase of opening of the economy, beginning first week of May this year. Therefore, there is also hope amongst businesses associated with the travel and tourism industry that they will see a strong resurgence in demand in the coming months.