The phone lines may be busy, but for Richard Vanderlubbe and his team of 25 travel agents, revenue is still months away. Now, he says, the financial aid keeping them stable is about to start shrinking.
Mr. Vanderlubbe, chief executive officer of Canadian travel agency Tripcentral.ca, says he has depended on government support over the past year to keep his travel agents employed. With government wage subsidies scaling back starting in early July, Mr. Vanderlubbe has deep concerns.
“They’re going to pull the rug out from under us, at the very last moment, when we’re starting to see the light at the end of the tunnel,” he said.
Travel agents operate on a commission structure, and most are not paid for their services until their clients complete their trips. This means although interest for travel later in 2021 is picking up, travel agencies are a long way from profitability, Mr. Vanderlubbe said.
“We’re starting to see an increase of people booking for this fall and winter, but these bookings are $100 deposits that flow through our hands to the suppliers. We don’t collect any revenue until 30 days after payment, or even after travel. Our revenue is deferred, but our costs are not,” he said.
Last year dealt a record blow to the sector, with 12,000 travel agency jobs lost in the first quarter, according to Statistics Canada. For the first time since 1991, the number of people employed in travel agencies nationwide dropped to less than 30,000.
The association representing Canada’s travel agencies is calling on the federal government to extend support for the industry, or thousands more jobs could be lost.
“It’s no surprise that the last 15 months have been catastrophic for the travel industry in Canada,” said Wendy Paradis, president of the Association of Canadian Travel Agencies (ACTA). “The sector has seen a revenue decline of nearly 95 per cent, so the situation is dire.”
Most travel agencies relied on government funding, including the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS), to avoid closing.
Starting on July 4, the weekly wage subsidy will gradually decrease from a maximum of $847 to $226 an employee. Results from an ACTA survey conducted in April showed 75 per cent of travel businesses will not survive to the end of 2021 without financial aid at the current maximum level.
Katherine Cuplinskas, a spokesperson for Finance Minister Chrystia Freeland, did not address ACTA’s specific concerns about the decline in funding. She said the federal government has offered targeted support to hard-hit businesses and organizations experiencing a drop in revenue, which includes the wage subsidy, rent subsidy and lockdown support.
“We will continue to be there for Canadians and small businesses, including travel agents who have been especially hard-hit during this difficult and unprecedented time,” she said in a statement.
Ms. Paradis said a reduction in the support programs will force employers to lay off more workers.
“We appreciate that the financial aid programs were extended. However, with travel bans still in place, we cannot survive with the government’s scheduled month-by-month decline in the aid programs beginning in July,” she said.
Before the pandemic, Tripcentral.ca had more than 150 staff. Mr. Vanderlubbe said he was forced to lay off 30 per cent of his staff in 2020, and put most remaining agents on furlough. He said if government support does not continue, he will have to go further into debt to cover fixed costs and payroll.
Women and small-business owners, two groups suffering disproportionately from the economic effects of the pandemic, have been hit particularly hard by the travel industry’s shutdown. According to ACTA, half of all travel agents are sole proprietors and 75 per cent are women.
Gail McQuarrie, an independent travel agent in Lake Echo, N.S., said she was not compensated for a lot of work last year because of cancellations. She estimates her hourly rate for 2020 on average was about $2.
“It’s hard when you do 40 or 50 hours of work in a week, and then look at your pay stubs at the end of the year and think, ‘that doesn’t add up,’” Ms. McQuarrie said. “I think you’re going to start seeing a non-refundable fee structure so that we get paid for at least some of the work we’re doing.”
Lia Hershkovitz, the founder of Guide Me Away, a two-person travel agency in Vancouver, said she refunded all her clients’ commissions from 2020. While she’s starting to see the tide turn on travel, she said this year is still a challenge.
“People are booking a lot more for November and December of 2021 and for 2022, but there are a lot of requests to be able to cancel as needed, and to be much more flexible.”
Until most Canadians have had their second vaccination and it is safe to travel, Ms. Hershkovitz said, “I don’t see anything changing.”
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