STA Travel set to fall into administration

The pandemic has claimed another tourism business, with the youth-focused STA Travel set to appoint administrators.

An STA Travel store.

The COVID-19 pandemic has claimed another tourism business, with the iconic student and youth-focused travel agency chain STA Travel poised to appoint administrators.

Founded in the Melbourne suburb of Carlton in the 1970s, STA Travel once had 70 retail shops in Australia alone. It had more recently shrunk to 35 local stores and was acquired by the Swiss-based STA privately-held Travel Holding AG group to be part of a global business, with headquarters in Zurich and London.

Chief executive Casper Urhammer, of parent the Diethelm Keller Travel Group, said in a letter to the tourism industry that he was poised to appoint an external administrator in coming days.

“The global magnitude of the pandemic crisis has brought the travel industry to a standstill, including STA Travel,” Mr Urhammer said in the letter, obtained by The Australian.

“In the wake of COVID-19, we have left no stone unturned and took decisive measures, cut costs, restructured, and renegotiated terms with suppliers, trying to secure the business beyond the pandemic crisis.

“However, sales have not picked up as anticipated, due to consumer uncertainties, further restrictions and renewed lockdown measures, which are expected to largely continue into 2021.

“As a consequence, STA Travel Holding AG, is filing for insolvency. While the parent company STA Travel Holding AG in Switzerland is affected, local day-to-day operations by STA Travel may continue around the world.”

Travel industry stalwarts said it was no surprise that STA Travel was in trouble, saying “there are no travellers and no students”.

STA’s Sydney city stores remained closed yesterday.

According to Australian Securities & Investment Commission filings the Australian operations of STA Travel recorded a net before tax loss of $13.84m for the year to December 31, 2019. According to ASIC the company has a net current asset deficiency of $8.146m and was relying in part on a letter of financial support from the Swiss parent, STA Travel Holding AG.

International airlines have been the highest-profile victims of the pandemic, with Qantas on Thursday posting a $27bn full-year loss, but travel firms are also doing it tough. Australia’s Flight Centre last week said it expects to report an overall COVID-19-driven loss of up to $875m for the year to June 30.

In April, STA Travel was hit with a $14m fine over the false and misleading promotion of its MultiFLEX Pass product, which allowed travellers to change their flights multiple times.

STA was originally an acronym for Student Travel Australia, but later branded itself as Student Travel Association, and then “Start The Adventure”.