Dues of USD50mln are owed by hotels to Travco, chairman

Outstanding dues of USD50mln owed by hotel subsidiaries to Travco Group International Holding consist of contracts signed with foreign travel companies, according to chairman Hamed El-Chiaty. 

With the affiliated hotels  falling behind schedule with payments since last January, these liabilities will be paid in installments, as most foreign travel companies are undergoing some kind of a cash crunch, he told Osoul Misr Magazine.   

“ A gradual returning to normal, constituting just 25% of tourist activities, will be possible by next October, as full capacity may be reached by October 2021,” said he. 

Tourists have first to feel safe before deciding to visit a destination. With air flights being hit hard, average ticket prices may hike, he explained. 

Many airlines felt the pinch, as they  started to accumulate  liabilities and run out of cash, he added, citing Lufthansa and British Airways among other airlines which are badly in need of liquidity to rebound.

With new precautionary measures in place, average ticket prices will surge because only 120 passengers will be allowed into a single plane.  

Travco cut working hours and dropped incentives for up to 20,000 employees, he elaborated. 

“ while prioritizing paying salaries,Travco decided to discard plans set for inaugurating new hotels in 2021 and 2022 in view of the shrinking revenues.” 

Initiative championed by the Central Bank of Egypt to assist travel companies is a welcome gesture but needs to be supplemented by other facilities such as the enactment of an array of tax reliefs. 

“ For instance, Taxation Authority requires travel companies to pay taxes over three tranches, 20% of taxes to be disbursed late April, 30%  in May and 50% in June. That means that the companies will have to cut salaries. It was presumed that tax payments may be adjourned for one year.”

With the aim of lending travel companies a hand, Ministry of Tourism initiative recommending the activation of domestic tourism programs can not be  a viable solution  for hotel owners.   “Sticking to  Coronavirus precautionary requirement of limiting occupancy to 25% of capacity will hurt profitability to a great extent.”