British quarantine for arrivals from Spain

On Saturday 25 July 2020 the British government announced that travellers arriving in the United Kingdom from Spain would have to quarantine for 14 days, with effect from Sunday 26 July. The measure covered the whole of Spain, including the Balearic and Canary Islands, and came with fines of up to £1,000 for anyone who breached it. Barely two weeks earlier, on 10 July, Spain had been exempted from quarantine.

The United Kingdom is one of the main source markets for tourists to Spain, and July and August concentrate a large share of the activity of hotels, holiday rentals, restaurants and transport. The decision came in the middle of the season, with very little notice, and forced thousands of travellers to decide within hours whether to return early or cancel. A day earlier, France had advised its citizens to avoid travelling to Catalonia. The British Foreign Secretary, Dominic Raab, defended the measure and said the following day that his country would not apologise for it.

What happens to bookings

When a foreign government imposes a quarantine, the consequences ripple down a chain: travellers already on holiday, those with tickets booked, operators who have sold packages and accommodation that receives last-minute cancellations. The quarantine did not ban travel, but it made the decision more costly: two weeks of isolation on return, with its consequences for work, made the trip unviable for many. For the local business, the effect is more immediate than any annual figure: each August cancellation leaves a room or a table empty that cannot be recovered.

On the Spanish side, concern centred on the islands, which depend on British visitors, and on coastal areas. The Balearic government even sought a safe air corridor that would allow some trips to continue with checks, with no guarantee that it would succeed. Nor was it the first time, nor would it be the last, that travel conditions changed within days.

Contracts and insurance

For a business in the sector, the first question is what the contract says: cancellation terms, deposits, refunds and force majeure. A change in official advice does not always amount to force majeure, and the answer depends on the specific wording and the rules applicable to package travel. It is worth documenting every cancellation and every communication with customers and operators. If the customer booked through an agency or a platform, it is also worth clarifying who must refund the amount and by when, because that chain is often the source of the most disputes.

Insurance is the second issue. Some travel or business-interruption policies exclude pandemics or restrictions imposed by third countries, and others require the claim to be notified within a short period. Reviewing the policy, speaking to the insurance broker and claiming as soon as possible is better than waiting to see how the situation develops.

Liquidity and an autumn plan

For many tourism businesses, the summer season is what finances the rest of the year. If July and August fall short, cash flow has to be adjusted until spring: reviewing loan maturities, negotiating terms with suppliers and checking which support measures remain in force, such as the furlough schemes extended to 30 September or the tourism mortgage moratorium approved weeks earlier.

It is also worth diversifying source markets where possible, because depending on a single country makes a business vulnerable to any change. And it is useful to prepare low, medium and high occupancy scenarios, so as not to take staffing or investment decisions on the most optimistic hypothesis. This is general information: consult your adviser before deciding.

In tourism, uncertainty is one more cost that is worth budgeting for.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.