November 30, 2020

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European Tourism Pummeled as Whitbread Cuts 6,000 Jobs

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(Bloomberg) — Europe’s tourism industry is reeling from the resurgence of Covid-19 and new measures...

(Bloomberg) — Europe’s tourism industry is reeling from the resurgence of Covid-19 and new measures to curb it, with U.K. hotel operator Whitbread Plc planning to eliminate almost one in five jobs.



a person sitting on a bed: A chambermaid makes a bed in a bedroom at a Premier Inn hotel, operated by Whitbread Plc, in London, U.K., on Wednesday, Jan. 17, 2018. The hotel and restaurant group, that owns Premier Inn hotels and Costa Coffee, is due to report third quarter results on Thursday.


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A chambermaid makes a bed in a bedroom at a Premier Inn hotel, operated by Whitbread Plc, in London, U.K., on Wednesday, Jan. 17, 2018. The hotel and restaurant group, that owns Premier Inn hotels and Costa Coffee, is due to report third quarter results on Thursday.

The operator of Premier Inn hotels said it will cut as many as 6,000 workers. Tourism-related companies are resorting to drastic measures as consumers cancel travel plans and heed advice to stay home to avoid catching or spreading the coronavirus.

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The U.K. announced Tuesday that bars will start closing earlier this week, amid a range of new restrictions. Prime Minister Boris Johnson reversed course on a drive to encourage people to return to offices, saying they should work from home again if possible. Along with quarantines on travelers, the new restrictions are hitting airlines, restaurant chains and pub owners hard after a nascent summer recovery from months of lockdown.

JD Wetherspoon Plc said Tuesday that it’s written to 1,000 workers employed at pubs in British airports to inform them that as many as 450 jobs are at risk. British Airways owner International Consolidated Airlines Group SA has lost a sixth of its market value since Friday. The Stoxx 600 Travel & Leisure Index fell 1.9% on Tuesday, extending Monday’s 5.2% decline. That’s after t

Johnson’s government has taken a tough stance after facing criticism over failures in the virus testing system and conflicting messages on reopening workplaces. The U.K.’s daily count of newly reported Covid-19 cases has climbed above 4,000, a level not seen since May. The country’s top scientific adviser warned Monday that the country is on track to reach 50,000 new cases a day by mid-October without urgent action.

Read more: Europe Finds Mass Testing Is No Panacea for the Coronavirus

New cases have exceeded 10,000 recently in France and Spain, which are reporting more infections on a daily basis than they did during lockdowns in March and April. That’s prompted countries including the U.K. to impose 14-day quarantines on travelers returning from these destinations and others, hitting hotels and tour operators.

Whitbread’s proposed job cuts are the latest in a wave of layoffs across Europe. TUI AG, the region’s largest tour operator, has started a program to cut overhead costs by 30%, which may result in the loss of 8,000 jobs.

Package Tours

TUI said Tuesday that it will offer only 25% of the package tours during the fourth quarter that it operated a year earlier. The company, which counts on British and German tourists to fill its planes and hotels in sunny climates, said it’s going to focus on lower-risk destinations. While its outlook for next year was positive, winter bookings are down 59% from normal levels.

The fresh capacity cuts underscore a dire outlook across the airline industry, where European carriers have targeted more than 80,000 jobs for elimination. After a disappointing summer, carriers are facing a very difficult low season over winter, with some in danger of not making it through to spring, when business would normally pick up again. Even then there’s no guarantee of relief, with the timing of a coronavirus vaccine uncertain.

Just this week, Deutsche Lufthansa AG accelerated fleet and staff cuts amid mounting concern about the severity of the downturn. Air France-KLM Chief Executive Officer Ben Smith also weighed in, warning in an interview with L’Opinion in that more cost cuts may be needed after travel demand dropped off at the end of the summer.

It’s all had a knock-on effect on European planemaker Airbus SE, which counts Lufthansa and Air France-KLM among its biggest customers, and suppliers like Rolls-Royce Holdings Plc. Airbus Chief Executive Officer Guillaume Faury issued a fresh warning on Tuesday that he’d have to resort to forced job cuts after the aviation outlook worsened.

Sandwich Shops

Even with fewer people going abroad, there’s no respite for restaurants. In August, Pret A Manger Ltd. cut 2,800 jobs, about a third of its U.K. store employees, as working from home erodes demand at sandwich shops.

Whitbread, which has more than 4,000 Premier Inn hotel rooms across the U.K., said Tuesday it will consult with worker representatives to discuss the redundancies after first-half comparable sales plummeted 78% in the U.K. The company said it hopes that voluntary departures will make up a significant part of the reductions.

“This is a regrettable but necessary step to ensure that we emerge from the crisis with a lower cost base, a more flexible operating model and a stronger more resilient business,” Whitbread said in a statement.

(Updates Stoxx 600 Travel & Leisure index in fourth paragraph)

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