Travel agencies can't even get loans to get their money back to customers. In that vicious circle, they are doomed

Owners of travel agencies cannot get loans to return money to clients, they cannot get a refund of money that they forwarded to their partners before the outbreak of the crisis, and they are ...

Owners of travel agencies cannot get loans to return money to clients, cannot get a refund of money they passed on to their partners before the outbreak of the crisis and are in a vicious circle, where bankruptcy and bankruptcy are currently the only way out. Which would have far-reaching negative consequences throughout the chain and industry, and service clients would no longer be able to get their money back due to bankruptcy.

The Voice of Entrepreneurs Association has been warning about the same for a long time, and in its last statement they reacted to the appearance of wrong information in certain media about travel agencies.

"A certain media outlet mentions that travel agencies received "billions of kunas in aid" from the state, which is simply not true. Also, Minister Fuchs and Minister Brnjac are asking travel agencies to find money to return the vouchers issued to passengers, and a new law is mentioned according to which the agency is obliged to return money to clients within 15 days. However, there is no mention of the fact that travel agencies have lost on average more than 90% of revenue in the last year”Warn the UGP and point out that travel agencies have so far not received a single penny of assistance from the state or from any other institution.

The only help that the agencies received was 4.000 kuna for workers, that is, funds intended only for employees. Also, for each employee, the employer has an additional cost of transport and other fixed costs for which no solution has been found to date. Fixed costs are not covered and travel agencies are closed and cannot cover all incoming costs. 

Also, it is important to emphasize that travel agencies are not closed by the decision of the National Civil Protection Headquarters, but their business is completely limited by the measures of the Government of the Republic of Croatia.

All travel agency owners want is to give customers back the money from the vouchers they bought and save their employees ’jobs and their business

The state has offered travel agencies state guarantees for loans, but banks are rejecting travel agencies' loan applications. ”Due to the loan, we sent a letter to the Ministry of Tourism and Sports, but to date we have not received a response on which banks will accept state guarantees. It was only when the owners of the travel agencies approached the banks that they found out how much money they could get and that did not agree with what the Ministry of Tourism and Sports was releasing to the public. The amount can be as the bank estimates, which is far from enough. Travel agencies, at the mercy of the state, clients and market conditions, even agreed to that move”Point out from UGP and emphasize all that the owners of travel agencies want is to return the money from the vouchers they bought to the clients and save the jobs of their employees and their business.

UGP conducted a survey among travel agency owners last week that showed everyone is in the same trouble. According to the data we received from the surveyed travel agencies, the debt for vouchers amounted to over HRK 28.000.000,00, and only HRK 8.000.000,00 was repaid, which, as they point out from UGP, says that it is not true that more than 60% of vouchers were returned to clients because they are in the millions.

It is impossible to return all that money to the clients, because we remind you, the travel agencies did not work for more than a year, and they paid hotels, airlines and the like with the money paid from the clients. Vouchers were a lifeline for travel agencies at the time of entry, but only as a short-term solution. And now the vouchers point out, the Covid19 pandemic is still here, tourist traffic has been dormant for a year, and there is no concrete long-term solution for travel agencies.

"It is obvious that the state will allow agencies to go bankrupt and close their doors, and measures to preserve jobs will then mean nothing. Owners will have to close agencies, employees will lose their jobs, and clients will lose money”States the Voice of Entrepreneurs Association.

The owner and director of a travel agency sold one property and five cars in order to reduce the deficit and losses, but he is still at a big loss because he has not had any income for a year.

According to the UGP, his commentary gives the best description of the current situation of travel agencies: 

"The measures offered by the Government of the Republic of Croatia are not enough. I would dare to say that they are shameful, because we get 4.000 kuna from the state per employee. The company's cold running costs at the moment are HRK 250.000 per month. As the owner and CEO of the company, I sold one property and five cars to reduce the minus and losses. The company's losses at the moment amount to HRK 2 million. In a conversation with colleagues from France, I received information that France pays 80% of the gross salary to travel agencies. Additionally, the state gives a travel agency with five employees 10.000 euros a month. All agencies received loans from the state with 0% interest. And very importantly - France has rejected a request from the European Union to cancel vouchers for services not provided during the COVID-19 virus pandemic. That is how the state protects its tourism industry! ”

The Association of Croatian Travel Agencies (UHPA) also reacted to the issue of refunds for unrealized trips organized by travel agencies and the correction of incorrect information that the Government of the Republic of Croatia has provided more than 1 billion kuna in assistance to travel agencies.

Travel agencies felt the signs of the crisis that followed at the global level in early February 2020, when the first layoffs of guests from Asian markets arrived, and subsequently, due to national and international restrictions and recommendations of the authorities on travel and travel bans, all domestic and international organized trips, conferences and events in 2020 were almost impossible, the UHPA reminds and points out that this statement is followed by data from the Central Bureau of Statistics, which shows that the largest decline in revenue (-85%) in service industries as The effect of the COVID-19 disease pandemic is continuously achieved annually in the activity N79 of the Travel Agency by travel organizers (tour operators) and other reservation services and activities related to them.

"More than HRK 1 billion in assistance to the tourism sector, more precisely HRK 1.500.000.000, refers to guarantees for new liquidity loans that travel agencies must additionally borrow from commercial banks or the Croatian Bank for Reconstruction and Development (HBOR), and definitely do not represent direct grants”Pointed out the UHPA.

The UHPA points out that although travel agencies are prevented from performing almost all the services they can provide under the Tourism Services Act, they are not formally banned from working, and therefore travel agencies cannot use any government grants (such as coverage fixed costs that have been made possible by formally closed activities since December) except for aid for jobs that are in fact earmarked funds for employees and not for employers to cover other fixed costs.

Photo: Klaudio Vrančić, RI Ring

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