Travel agent forced to remortgage house to keep doors open, help clients

Tuesday, 21 July 2020

Stephanie Mitchell: “We have no income but we are required to continue the work, we’re running but we don’t know how to get off.”

Travel agent Stephanie Mitchell is caught in an impossible position and says she and her industry need urgent Government help.

Her clients need her to remain in business to help them access their refunds for trips cancelled because of Covid-19. These can take months for airlines and tourism operators offshore to process.

But at the same time, that time-consuming work provides no income. Once the second round of the wage subsidy runs out, there would be no money coming in to keep the doors of most travel agents’ businesses open, she said.

She has taken out a mortgage on her home and is falling further behind financially each week.

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“We have no income but we are required to continue the work, we’re running but we don’t know how to get off. We can’t stop doing what we are doing but we have no money to carry on.”

She said all of her staff were being paid out of her new mortgage debt, as well as the business’s insurance and rates.

“Then you get customers coming in, cross with us because we don’t have their refunds yet… they want to be kept in the loop.

“I made the decision to push through and get everyone’s money back but we really need the Government to help us out. The industry will collapse if it’s too long before the borders are open.”

Flight Centre has closed more than 50 stores and laid off hundreds of staff.

She said refunds were about three times the work of the initial booking.

She has been involved in discussions with the Ministry of Business, Innovation and Employment, in which the industry sought a support package of $180 million. She said that was equal to about 0.7 per cent of the money that was due in travel refunds.

Travel agents and brokers do not qualify for the tourism support available for in-bound operators.

“We have been working for five months now with no income. We have got the wage subsidy but it’s nowhere near enough.

“We have been repatriating New Zealand citizens since mid-February and repatriating client funds since mid-March and have several months of work ahead of us including applying future credits for clients. This work will take us well into next year. We will also play a crucial role in kickstarting travel to New Zealand when the time comes by filling the outbound half of flights.”

The second round of the wage subsidy is only for eight weeks and will start to expire for early applicants at the start of August.

Without their travel agents, many clients would not know how to begin to get their refunds, Mitchell said. “We have a lot of older customers who were going on hosted tours so they were taken care of. They’re not used to taking care of the details.

“We’re normal Kiwis with a home and a mortgage but we’re not offered any help. We’re just going to keep paying the bills until there’s nothing left.”

Flight Centre said in April it was closing 58 New Zealand stores and standing down 300 employees. It is understood those staff are currently being consulted about their future. House of Travel turned to private equity backers for support.

Another travel broker, Shane Lust, has set up a petition calling for the Government to extend the wage subsidy for travel agencies.

By Tuesday evening, it had more than 11,000 signatures.

He said the industry had been working “harder than ever” for months with no income. “Many of us have a large client database we are loyal to. It’s difficult to see what could happen after six months with no income but we need to be there to manage refunds coming through.”

He said 70 per cent of those he had applied for still had not been processed.

“We understand why the borders need to remain shut. We have all done our part for the team of five million but while other New Zealanders are getting back to normality we are effectively still in lockdown. We feel like we’ve been left out on the battlefield. Everyone else can see the light at the end of the tunnel but it’s not there for us.”

A Ministry of Business, Innovation and Employment spokesman said the Government was considering how it might further support travel agencies,

“In addition to having access to the original and extended wage subsidy scheme, travel agents, like other businesses, have been able to seek assistance through support measures including the business debt hibernation, business finance guarantee, and Covid-19 small business cashflow [loan] schemes. Government officials have been engaging with the industry to investigate potential options for additional support for travel agencies, and decisions on this are expected in due course.”