Leading travel accountant Jonathan Wall has warned that ‘hobbyist’ agents and those who act only as ‘shopkeepers’ might struggle in the tougher business environment following last week’s Budget.
He warned travel businesses need to be ‘laser-focused’ on operations and margins, not just product knowledge, to thrive.
Speaking at a post-Budget briefing in London this week, Jonathan, who is Head of Travel at accountancy firm Xeinadin, said: “The days of the hobbyist or the shopkeeper aren’t good enough. You have to be laser-focused on what you do.
“You can’t just get by on having travel product knowledge. We are seeing travel companies get better and better at running their business since COVID. Those that have adapted have thrived.”
However, he said the Autumn Budget ‘could have been a lot worse for the industry’, as there were ‘no major shocks or changes’. “Most business owners can breathe a sigh of relief,” he added.
That said, businesses employing large numbers of minimum-wage staff will feel the impact of rising employment costs after Chancellor Rachel Reeves confirmed there would be an increase in the National Living Wage and National Minimum Wage, said Jonathan.
“If you [as a business] employ lots of people on minimum wage, it’s going to hurt. An agency gets commission, and they are still going to get the same commission from suppliers. But if their salary costs go up, it needs to come out of their pockets, and it’s going to affect the bottom line. It is good news for the employees, though.
“I think it will be the high-volume, low-margin business that will be affected. For example, OTAs [online travel agents], they will be dealing with rising staff costs and competition, as well as people using AI to search now.”
Jonathan’s view was echoed by Xeinadin Director David Kinsella, who said new businesses would need to carefully consider the increased costs of taking on staff.
“Start-up companies will need to think about taking on staff now due to bigger costs, but I think if people have the money behind them, they will still be opening businesses into next year,” he said.
ABTA Chief Executive Mark Tanzer said last week: “The Government must be careful not to deter businesses from hiring staff, especially those younger people who are looking to start their careers in travel.”
Read more: The industry reacts to the Budget
