When people want to travel, they turn to a tour operator to help plan and package their trip. But with a COVID-19 lockdown on travel, expectations for a brilliant 2020 have dimmed, and tour operators are working overtime to keep their businesses and staffs intact.
“Our members were the canaries in the coal mines,” says Catherine Prather, president of the National Tour Association. “Weeks before other businesses closed down, the public started canceling trips and asking tour companies for refunds.”
According to an NTA survey two weeks ago, the association’s 518 tour operators have canceled more than 59,000 trips, affecting nearly 1.8 million travelers, and they have refunded nearly $1 billion to customers for tours with departure dates that stretch into 2021.
And that was two weeks ago.
Hard-hit now, tour companies will continue on a long road to recovery when the United States and other countries reopen, Prather adds. “People will be eager to dine out or go shopping again as soon as lockdowns are lifted, but tour operators need to also meet their clients’ desire to travel as soon as we’re able.”
Like many small business owners around the world, tour operators have turned to the programs established by their governments to help them keep staff members employed and operating costs covered. The most commonly pursued funding sources in the United States are the Payroll Protection Program and Economic Injury Disaster Loans.
Both programs stopped taking applications on Thursday, April 16, when the money ran out. Congress is all but certain to add billions more to the programs this week, but it’s a stressful time for everyone in the travel industry.
Those tour operators who have already been awarded loans can breathe easier now. Others, with their loan applications somewhere in the pipeline, are hoping that their turn will come soon. And they’re all working hard to stay afloat beyond the eight weeks that the loans cover.
Seven NTA members from across the globe shared with Courier their progress through the process of getting loans that, they hope, are lifelines for their business.
Jay Smith | Sports Travel and Tours | Hatfield, Massachusetts
A former chair of the NTA Board of Directors, Jay Smith has been a leading voice in an ongoing email thread with other tour operators in the association’s Owners Network, and he successfully sought funds from two federal programs.
“I was confirmed for a PPP loan on Thursday (April 16), and the money was deposited in my account by Tuesday,” Smith says. “I also received an advance on the EIDL, which was first set to be $10,000 but later became $1,000 per employee. I am still waiting for the bigger loan opportunity that was originally for up to $2 million at 3.75% for 30 years, but from what I understand, that fund has run out.”
While the PPP and EIDL differ in terms and uses, they both require time, documentation, and patience.
“The PPP application was only a two-page document but needed to be backed up with financials, payrolls, 940 forms, profit and loss statements, 1099s, etc.,” Smith says. “I applied through two banks, a community bank and a larger national one, knowing I can take only one loan. They both passed all my info to the SBA, and then it was just a waiting game. I was told it could take between 14 and 21 days, but it only took around 10.
“The EIDL was ridiculous,” he says. “The SBA website was so slow that you had to wait several minutes after each question you answered. I worked on it for hours, and then the whole thing crashed and dumped everything I had entered. Fortunately, they came back a few days later with a shorter form and a faster process that only took 10 minutes.”
With eight full-time employees and one part-time worker, Smith received $9,000 in EIDL funds, with no consideration for the 20 part-time tour hosts he employs as contract workers. He can use the PPP loan, when it arrives, to pay the salaries of his nine-member team now working at 80% of their salary and hours.
“At that reduced rate, they are eligible for a small check under the Massachusetts Unemployment Workshare program, plus an additional $600 a week from the federal government for eight weeks,” Smith says. “If I bring them back to 100%, then they would not be eligible for the $600 for those two months.”
Smith says he might set up a separate account for the PPP funds so he can carefully track what he pays for salaries, benefits, and utilities. By keeping staff members employed, he can get the loan forgiven. And with the loan, he can stay afloat.
“This will help me to pay my staff and rent at least for the next eight weeks.”
Frank Fine | Sun Tours | Albuquerque, New Mexico
Another NTA member who is active in the Owners Network, Frank Fine learned from his peers that it was important to begin the application for federal funds quickly.
“I contacted my banker immediately, he sent me the forms, and I replied within an hour,” Fine says. “After a week, my banker sent me updated requirements that I completed, and then I was approved. It showed up in my account on Tuesday, the 14th.”
Of Fine’s 14-member staff, nine are full-time and five are part-time; four of the part-timers are furloughed, as are Fine and his wife. He’s working now to determine how to best use the loan to get his people back to work.
“For the last month, so much of our work has been getting refunds to our clients,” Fine says. “The biggest hurdle has been with airlines that offer credit only, but we’re committed to giving our clients their money. We want to do this right.”
Fine is also trying to retain his clients’ business and is offering incentives to rebook canceled trips. When his staff calls booked passengers to let them know a canceled trip has been rescheduled, they make sure the client understands the new plan and the reasoning behind it.
“Most of our people want to travel, and we believe they’ll be with us when the time comes,” he says. “A lot of tours, we’re just moving a year later. Some of our international tours, we moved from this spring to early December.”
After completing the PPP application process, Fine says he is glad that he had previously established a good working relationship with a community bank. He’s also glad to have a new lease on his business’s life.
“Getting that PPP money gives us a bit of relief, and our financial position is improved,” he says. “We’re losing money, but we’re well capitalized.”
Amid his optimism, there’s a wistful note in Fine’s comments.
“We were on track for a record quarter this spring,” he says, “but it all went by the wayside.”
Michele Michalewicz, CTP | Western Leisure Tours | Midvale, Utah
Western Leisure has been in business for more than 40 years, but owner Michele Michalewicz has never faced a challenge like COVID-19.
“We’ve definitely had our ups and down over the last four decades, but the coronavirus has devastated our industry, as all travel has come to a halt,” she says.
Michalewicz has kept her full staff on board, working remotely with “a small reduction in pay.” And she’s surprised at how busy they are.
“We usually book tours for other operators 12 to 18 months out, but the phones are ringing now with operators who want product this fall, along with questions about new tours for 2021 so they can get their passengers excited about next year’s vacation,” she says. “Companies with their own motorcoaches need to get those buses moving.”
Michalewicz applied for assistance through both the PPP and EIDL programs.
“When I heard about the PPP loan, I immediately called my local bank representative and asked for her help,” she says. “Starting on March 12th, I put together the many documents that were required, from payroll estimates and future projections to articles of ownership.”
After hearing that different documents were required by the SBA, Michalewicz got word on April 4 that she needed to reapply with a different form and submit totally different documents. “It wasn’t easy but I persisted,” she says.
After a few days, Michalewicz started hearing that PPP funds were running out.
“I checked my email about a hundred times a day to see if I was approved, and on April 16th, I learned that I had been approved. On that same day, I heard the funds had been depleted,” she recounts. “But when I checked my bank balance on April 17th, I saw that I had received the loan. I still can’t believe it.”
Michalewicz is prepared to follow all the rules for spending and tracking the money, and she’s glad she went through the process.
“Will this tide me through until we start traveling again?” she asks. “I doubt it. But it’s a start.”
Fraser Neave, CTP | Wells Gray Tours | Kamloops, British Columbia
The coronavirus pandemic is affecting NTA members in each of the 42 countries that are represented in the association. And the United States is not alone in providing assistance to the distressed travel industry.
Canadian counterparts to the U.S. programs that assist small businesses are the Canada Emergency Wage Subsidy, which provides a wage subsidy to cover up to 75% of workers’ salaries for 12 weeks; and the Canada Emergency Business Account, which issues interest-free loans of up to $40,000 to help cover operating costs.
Fraser Neave says his company is applying for both. Neave also has a bit of good news for the days ahead.
“We’re cautiously optimistic about the outlook,” he says. “We launched our Mystery Tour on April 6th, and within 10 days, 29 people booked and deposited. It’s set for late September, and our capacity is 30.”
Neave adds that although his company is now canceling or postponing tours through June and into July, they also are receiving new bookings every day on other tours down the road.
“British Columbia has been fairly successful in flattening the curve, and we think that clients are anxious to travel again later in 2020,” he says. “Perhaps there is a tiny bit of light at the end of this tunnel.”
Steve Uelner | Country Travel Discoveries | Elm Grove, Wisconsin
This story was set to have an uncertain ending.
Like so many other tour operators, Steve Uelner says his company was heading toward a record year in 2020, but like every other owner, he now acknowledges that’s not going to happen.
“It’s been a wide range of emotions, from sadness, anger, frustration, and disappointment to acceptance,” Uelner says. “Not knowing when retirees will be ready to get back on a motorcoach again makes this difficult.”
For now, Uelner and his staff are staying busy. “We’re working on 2021 tours, and we’ve tried to transfer as many travelers as possible to tours later in 2020 or in 2021. But some clients just want refunds. They want their money back until this is over,” he says.
The Country Travel Discoveries staff is being paid 80% of their salaries, and Uelner says he registered for the Payroll Protection Program with his bank prior to the April 3 rollout, but it wasn’t until the next week that he could actually begin the application process.
“It’s been slow throughout,” he said last week. “Each time we submit a step, our bank has to do a review.”
The last big step came after Uelner received an emailed update from the bank at 10 p.m. the night before Easter.
“I texted my accountant, and we agreed to meet in my office at 7:30 Easter morning to submit more documents and answer more questions. We are now again under review, and I’ve been hopeful to get the next email, but it hasn’t happened,” he said on Tuesday, April 14.
After hearing nothing all week, Uelner set Monday, April 20, as the day he would lay off three-quarters of his staff. “I have no choice,” he said.
And then his options expanded.
“Good news,” Uelner said in a Monday morning email. “Overnight, we received the loan, so layoffs are tabled for now. We are carrying on … at least for eight weeks.”
Joël Massé | Objectif France | Lacenas, France
With France’s borders closed, Joël Massé and his eight-person staff face the same situation that his North American colleagues in NTA are dealing with.
“Like all destination management companies and most tour operators around the world, we are coping with a brutal drop of activity,” he wrote on NTA’s Engage community platform. “Being a small company probably made it easier for us to adapt quickly, and financial support from the government, which pays for up to 85% of salaries, has helped us keep the entire team on board.”
Massé’s biggest challenge has been to offer his clients an acceptable solution to the dozens of trips scheduled for this spring that have been canceled or postponed. Some 40% of the company’s tours in March, April, May, and June have been canceled—10% in late June have not been determined—and 50% have been postponed, mostly to the same dates next year.
What makes Massé’s situation dramatically different from tour operators in the United States and Canada is a government law that allows travel companies in France to withhold refund payments to travelers and offer a credit that’s valid for 18 months.
“This credit is likely to be refunded at the end of those 18 months, but the main goal of this law is to avoid a major cash crisis in the French and European tourism industry,” Massé says. “And the authorities hope that travelers will accept the voucher and postpone their trips.”
During a time when very few calls are coming in, Massé is working on a new website, which he finds energizing both for his staff and for his business.
“Working 99% with tour operators and online travel agencies makes us a bit vulnerable, so we will extend our business and also work directly with consumers.”
Massé believes France has reached the peak of COVID-19 hospitalizations, and he hopes that travel in and around France will be possible again as soon as September.
Laurie Lincoln, CTP | Main Street Experiences | Lakewood, California
“It’s a difficult thing to process,” says Laurie Lincoln. “You put in 35 years of blood, sweat, and tears to build a healthy company, and then—all of a sudden—it’s on life support.”
Starting in early April when the U.S. aid programs launched, Lincoln applied for both PPP and EIDL. She was hoping to get the $10,000 emergency advance from the EIDL program, but she never received an acknowledgement or a check. And her experience with PPP hasn’t been successful, either.
“After numerous phone calls and personal visits to my bank, I finally got an appointment to file my application for the PPP on April 7th,” Lincoln says. “My banker looked like a deer in the headlights over the whole process. After I applied, I had no idea what to expect, and there was no point in asking my banker, because I’m sure she had no idea either.”
A week after filing, Lincoln signed documents from her bank via email and was assigned an SBA loan number. But by the start of this week, there were no deposits to her bank account.
“I can’t get confirmation whether I’m in the queue or not,” Lincoln wrote in an email on Sunday. “If we don’t have funds this week, I’ll be laying off staff.
“We are all grieving the possible loss of our companies.”
Editor’s Note: Hours after this story was posted (April 21), Laurie Lincoln received a call from her banker with news that her PPP loan was approved for funding.
The U.S. Senate is expected to pass a bill today that will pump another $300 billion-plus into the Payroll Protection Program for small businesses, with an additional $50 to $75 billion available in the form of disaster loans.
For more travel industry resources on COVID-19 click here.
Top photo ©IRStone/Adobe Stock
