An overwhelming proportion of agents in a recent survey have indicated a student fee protection solution would be “useful” for the study travel sector following the global pandemic, with most reporting huge turnover declines between February and August 2020.
More than 90% of respondents to a recent report said that business had dropped by at least 70% compared to 2019, matching with a similar survey carried out by MSM that found 84.8% of responding agents had experienced a loss of income since the pandemic started.
“Schools should get the money at the due time and the agent should be feeling confident”
To rebuild trust and market confidence, the agency association Federation of Education and Language Consultant Associations has said it is exploring options to develop a deposit account that will hold payments until students arrive at the school and called for agents to have more of a voice in contracts they sign with language schools.
The survey carried out by FELCA showed that almost a quarter (23.7%) of the 115 responding organisations said that turnover in the seven month period between February and August had dropped by 100%.
It also revealed that agents are only marginally more positive about the rest of 2020. Although the great majority expect to see significant drops compared to business in 2019, agencies anticipate the decline to be only a little less severe than earlier in the year.
While 45.6% of respondents said business fell by 90% earlier in 2020, 21.9% said they expected the same decline for the rest of the year.
Almost 70% of respondents still expect a drop of 70-100% between September and December compared to 2019, with FELCA commenting that it doesn’t “see any bright future in front of us at the moment”.
Speaking with The PIE News, FELCA president Paolo Barilari said agencies are concerned with solving two key problems – creating a guaranteed and secure payment system and introducing school-agency contracts that feature more input from agencies.
According to the report, some 89.5% of respondents agreed that a trust account would benefit the industry, while nine in 10 said that a contract “good for both agents and schools” would be useful for their business.
“We are talking to some big financial institutions right now just to see if something is possible,” Barilari explained.
“Our business and our industry has been based on trust [between] students, schools and agents,” he said, indicating that the pandemic had in certain circumstances eroded that trust between partners.
A deposit account would be “safer for both sides”, he suggested.
“Why don’t we agree on some pillars, some principles that everybody’s happy with?”
“Schools should get the money at the due time and the agent should be feeling confident that if something happens before the student actually arrives, they can get the some or all of the money back, depending on the case.”
Additionally, contracts that agencies have signed as they partnered with schools do not include “the point of view and the position of the agents”.
“Until now, many business relationships between agents and school [have been based on] shaking hands only… Let’s say 50% of the time, but maybe less, you get a contract written by the school, you quickly read it and then you sign and then you send it back.
“Everything is the school says the agent must do this, the agent must do that,” Barilari said.
“I think it’s time to say, why don’t we write a few strong points that everybody must accept… that states something that is good for both schools and agents. Why don’t we agree on some pillars, some principles that everybody’s happy with?” he continued.
Contracts should be “more balanced”, Barilari suggested.
Stakeholders have also voiced their support for industry restructuring and reform previously, following tension between some agents and educators around issues stemming from the pandemic.
Other suggestions for rebuilding trust between agents and schools could be to reduce payment times or holding back part of payments in order to refund students should problems arise.
“A settlement of the invoice just three days before the course start would very much reduce the risk that something is going to happen,” he said.
“Why don’t we, for example, keep a little amount like 5-10%, and we send it after maybe three days to say, ‘everything is okay. My client, my student is happy’.”
In response to the coronavirus pandemic, agents also indicated they had reduced spending via renegotiated office rents or other contracts and switched to working from home, reduced or laid off staff, cut communications spending or halted business activities partially or fully.
“We are losing a lot – we are losing good schools, we are losing good agents, and of course, we are losing also good employees… Of course, we have lost some good people in the industry for sure,” Barilari said.
More than 50% (60 agencies) of respondents said they had injected personal funds to support their business during the height of the crisis, while 43.9% said they had received government support and 42.1% said they had taken bank loans.
“We are losing good schools, we are losing good agents, and of course, we are losing also good employees”
“It was just like a picture of people trying to get money to survive from different sources,” FELCA said.
The survey “confirmed that really Covid-19 was a disaster for our industry”, Barilari added. “It was bad. It will get better, but very, very slowly.”
Much depends on how the virus evolves, with schools gradually opening and agencies beginning to send small numbers of students, he continued.
“I don’t see until now, such a big percentage of agencies that are stopping working,” he added.
“But big numbers are made through quite a lot of mini stays and school groups that go during the winter for one week. These mini stays, I don’t think we’ll see any of that until maybe Easter.
“So, of course, agencies that have been basing their job with these school groups, they will suffer a lot. Maybe we will see some closures of agencies at the beginning of next year.”
