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Leaseurope discusses future of auto rental in a crippled tourism sector, and changes to lease accounting for SMEs

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The international tourism numbers could drop by as much as 58-78% in 2020 as a result of the pandemic, leading to a loss of £705-930 billion in tourism exports, says new research by

Based on a United Nations Conference on Trade and Development report, the tourism industry’s troubles will cause a loss of 1.5-2.8% on global GDP, translating to a £910 billion to £1.72 trillion loss for the global economy.

As tourism is currently ranked as the third largest export sector in the global economy, the importance of automotive rental in the future of a sustainable and innovative tourism ecosystem was the key topic up for discussion at Leaseurope’s talk at the latest virtual European Tourism Convention in October 2020.

Speaking at the event, Leaseurope discussed the future of automotive rental, revealing that the European leasing and automotive rental industries purchased around 46% of all vehicles registered in the EU to provide their services.

Furthermore, as a mobility industry, seamless integrated cross border multi-modal transport lies at the heart of ensuring Europe can remain a key tourist destination in a sustainable manner.

The tourism sector has been highly affected by the pandemic and the Convention aimed to address the key challenges and form sustainable commitments for the 2050 Tourism Agenda. Signifying the market’s importance, the European Commission has announced plans to provide funding to the tourism sector as soon as possible.

Delegates at the Convention heard that this is a key time to address the remaining challenges in transport and mobility, including multimodality, cross-border operations and the sharing of data.

According to Leaseurope, the implementation of a supportive regulatory and funding framework is crucial to converting leasing and rental fleets to low-emission vehicles and building the necessary infrastructure. Furthermore, there are an array of legislative barriers in place that plague the journey to sustainable mobility, especially when it comes to cross border travel.

Additionally, the development of new mobility concepts hinges upon having fair access to data, both from vehicles as well as public authorities, and that tourism enterprises should utilise the funding support and training opportunities available to them to become more digital.

Concluding the event, participants agreed on the need to develop connectivity across the EU through coordinated responses to technical, institutional, and financial issues.

A recording of the full conference is available here:

Changes to lease accounting for SMEs

In addition to this news, Leaseurope warned the International Accounting Standards Board (IASB) to ‘think small first’ before extending the new lease accounting rules to the IFRS for SMEs Standard.

According to Leaseurope, the IASB’s comprehensive review of the IFRS for SMEs Standard included a number of helpful simplifications to IFRS 16, however lacked a full analysis on the regulation that is designed for larger companies and yet is set to be imposed on smaller firms as well. If gone ahead with, this regulation would not take into account the effect on small businesses.

Leaseurope – alongside the US Equipment Leasing and Finance Association and the Canadian Finance and Leasing Association – called for an independent cost-benefit analysis specific to SMEs before a decision is made on changes to lease accounting under SME accounting regulations.

IFRS 16 is typically used by large firms as IFRS for SMEs is not approved for use in Europe, however European national accounting standard setters often refer to changes in IFRS for SMEs when thinking about new versions of their own SME accounting rules.

Founded in 1972, Leaseurope currently represents around 1,700 leasing companies across Europe – approximately 91% of the European leasing market – in the leasing, long term and short term automotive rental industries. The scope of products covered by Leaseurope members ranges from HP and finance leases to operating leases of all asset types and also includes the rental of cars, vans and trucks.