Not even the biggest don’t last: Novice and Tez Tour downtime, no talk of profit

Tourism is probably the sector most affected by the new coronavirus crisis. According to data from the State Service for the Protection of Consumer Rights, in April there were a total of 251 tour operators in Lithuania.

In terms of sum insured, the largest companies are Tez Tour (€ 10 million) and Novadades (€ 8.9 million). In third place is the Polish capital Itaka Lietuva, established in 2017, but with 2.2 million. The amount of insurance in euros is far behind the leaders so far.

No talk of profit

The sole shareholder of Tez Tour, established in Vilnius in 2003, is Germesinvest, a company registered in Spain. According to the Registry of legal entities, in 2018 Tez Tour received 94.3 million. Sales revenue of 135.9 thousand. net profit of EUR.

According to Sodra, on March 13 (the last day before quarantine) Tez Tour had 44 employees, and from April 15 to 43. The Employment Service declares that the company has been declared inactive.

According to Inga Aukštuolytė, Head of Public Relations and Marketing at Tez Tour, most employees spend their downtime. “During this difficult period, Tez Tour strives to maintain its businesses and jobs while maximizing its costs,” he explained.

The interlocutor said that the situation in the tourism market is more difficult and unpredictable than ever.

“With the introduction of quarantine in Lithuania, not only were all trips canceled, but travel sales were also completely stopped. The details of the tourism business are such that there are many intermediaries in this industry, therefore, Working capital management is very important.When a customer buys a trip, their money travels to foreign partners and suppliers.

We have already paid our providers in advance for hotels, flights, etc., and it is currently impossible to recoup these funds. At the moment, we cannot estimate all the losses suffered by the Tour de Tez, it will be more realistic later when this situation is resolved and flights are resumed. In any case, the impact of this pandemic on the company’s financial indicators and on all of the company’s operations will undoubtedly be significant, “he said.

I. Aukštuolytė said that a large number of people are currently willing to postpone their travel plans to a later date.

“Travelers who do not have specific vacation plans and want to make a decision later due to the current uncertain situation, are offered travel vouchers covered by the tour operator’s insurance and bank guarantees that are linked to a travel contract and they are completely safe.

Furthermore, a significant number of people are waiting for final decisions on the situation and precise answers on reimbursements. On average, a traveler has paid an initial deposit of approximately 90 euros for a trip. This amount seems relatively small. But if we look at the number of trips sold by the tour operator, the total amount reimbursed to travelers would be unbearable for both the tour operator and the guarantee bank at the same time. The company’s obligations to all travelers are too high to be implemented without the necessary changes in the law: legalization of a longer refund period, “he said.

A Tez Tour spokeswoman said the 14-day money-back period did not resolve the situation, so effective solutions were sought.

“We hope to understand and support travelers. It is not that tour operators take the time and don’t give away travelers money, they just don’t have it to this day,” he said.

According to I. Aukštuolytė, without making the necessary decisions in the Seimas, a bankruptcy chain awaits the tourist market, which would not only have enormous economic consequences, but would further complicate the situation for consumers.

“All traveler contributions are safe: Lithuanian tour operators have special insurance and bank guarantees that protect against insolvency, but in bankruptcy, procedures and recovery could take a year or more, creating additional difficulties for people and companies, “he explained.

The interlocutor also stated that, in the context of today’s circumstances, there is no talk of profit.

“Because business and job preservation are being addressed. If tour operators were to be reimbursed for all client contributions for canceled trips, this amount would amount to more than 30 million euros,” said I. Aukštuolytė.

Losses suffered

The Novadades shares, established in 1999 in Kaunas, have been listed on the Warsaw and Nasdaq Vilnius stock exchanges since March 2018.

According to April data, 34.42 percent. The company’s shares are owned by the Central European tour operator S.a.r.l, 9.99 percent. – “ME investicijos”, 9.49 percent. – Fire radvilas, 6.86 percent. – Paliūnas lives, 6.86 percent. – Rytis Šūmakrias, and 29.39 percent. Sold freely.

In 2018, Novadades received 105.2 million. The profit from sales for the reference year amounted to 8.5 million euros. euros

Much worse for the company was the first quarter of this year, when it suffered 353,000. EUR consolidated loss. At the same time last year, the loss totaled 148,000. euros The Group’s consolidated revenues for the quarter amounted to LTL 23.4 million. EUR – 18.9 percent. less, and gross profit fell 28.8 percent to 2.5 million. euros

According to Sodra, on March 13 (the last day before quarantine) Novadades had 144 employees and from April 15 to 113. The company was declared inactive.

Dovilė Zapkutė, the company’s communications project manager, told Delfi that most employees have partial downtime.

“As long as work and study are done remotely and children do not attend kindergartens and schools, employees will use state-issued certificates of disability.” We are one of the hardest hit sectors, whose employees are on time. Partial or total inactivity, and we are no exception, “he said.

D. Zapkutė explained that the decrease in the number of employees was determined by seasonality.

“Seasonality in the travel business and some positions (such as tour guides or agents abroad) are linked to the beginning or end of the season. If the season does not start or end earlier, employment contracts with employees in certain positions expire. Furthermore, employee turnover in the tourism sector is typical, therefore, the decrease in the number of employees is related to the nature of the activity, ”he said.

Previously, it was announced that the Novice Board intends to recommend paying 70-80% of dividends each year. net profit of the company. Whether this will be the case this year is still unclear.

“Dividend problems are resolved at the general shareholders’ meeting in accordance with the procedure established in the Companies Law. The shareholders meeting was scheduled for the end of April, but due to the impact of COVID-19, it was postponed and its date will be specified soon, ”said D. Zapkutė.

In addition, he said the company is currently primarily concerned with people’s travel exchange plans.

“To postpone planned vacations to later times, we are communicating with partners, negotiating terms so that we can offer the best possible travel delay conditions for travelers who are just planning their vacations this year or 2021.

We are not traveling temporarily, but we are preparing for the end or relaxation of restrictions and we understand that the journey will definitely come back into our lives, perhaps only with more security requirements, different planning and travel habits. We understand that the market will change, so we are preparing intensively for that, “said a representative from Novaturo.