Recently, Mike Caplin discussed working this industry in tough times. Later this week, you will hear a similar theme from another industry leader. If you have followed the news the past few weeks, you have seen the housing, banking, and insurance sectors of our economy require huge bailouts to remain alive. Wall Street, Fannie Mae, Freddie Mae, and AIG all leaned on the U.S. Government for their Plan B. Unfortunately, individual agencies and the thousands of home based travel professionals are not as lucky. Uncle Sam is not one of our blood relatives.
We are certainly not immune to tough times. The airlines are still bleeding. Hotel occupancies are down. And if any of the casual polls I have seen are any indication, leisure travelers are a lot more cautious than they have been since 2001. This convergence of bad financial news is bad news for sure, but by no means is it insurmountable. As a business owner, you need to be as prepared as you can for virtually any eventuality. With awareness comes success.
In a tough economy, it is a very real possibility that some travel businesses will cease operations. The only surefire way to protect your clients is to sell travel insurance. I do not consider it an option at this point. And remember, self insured products may not cover their own insolvency. But, if we assume the clients are protected financially, how do you protect your business.
What are you going to do when your preferred tour operator to Destination X decides to throw in the towel? Do you have a backup supplier so you can still sell the destination? You should. Go register with them right now. Don’t wait untill you need them to learn about them. Take some time now and learn what properties they represent. Learn how they differ in policies from your preferred supplier. Learn how to explain the situation to your clients.
Considerably trickier is the possibility of your host going out of business. I am sure this is a “concept” that many had not thought about. Host agencies are not immune. In fact, they are probably more vulnerable because their margins (like ours) are also very slim. Hopefully you did your due diligence when you signed on and your host is financially sound. Hopefully you are reading the trade magazines and the Community on TRO in order to keep your ear to the ground. Some of the warning signs:
- Are your payments taking longer to reach you?
- Have payments been missed?
- Are payments to travel suppliers taking longer than they should?
- Have the service levels deteriorated considerably?
- If they are publicly traded, has their stock continued to decline?
- Has regular communication all of a sudden become less than regular?
There are valid reasons for any one of these, but if you are experiencing more than one, I would be inclined to do a little snooping on your own. Ask your fellow travel professionals for opinions. Another great source of information as may be the Business Development Managers of your preferred suppliers. Remember the old joke…What’s the fastest way to spread some news? Telephone, Telefax, and Tell a Rep.
I consider myself one of the largest cheerleaders for this industry and I hate to paint a bleak picture, but I am also a realist–these are challenging times. You also need to be real. You need to be aware of so many things that can impact your business. I know everyone is likely busy preparing a Marketing Plan for 2009, but carve out some time to take a close look at this ugly angle of your business—come up with a Plan B or even a Plan C or D. I hope it will turn out to be wasted time, but if not, it may be the most valuable time you have ever spent!
