Opinion: A shot of realism will help travel agents pull through recession

Opinion: A shot of realism will help travel agents pull through recession

The optimism that filled the newspapers after the inauguration of new US president Barack Obama was a rare treat in these difficult times.

What cheered me most was the acknowledgement in his acceptance speech that – among all the talk of hopes for the future – the time had come for some people to take some responsibility for their actions.

Call it a return to old-fashioned common sense.

Looking at all this economic gloom, it is pretty obvious how society’s reliance on unrestricted credit got us all into this mess.

An article in last week’s Travel Weekly brought it closer to home. If you didn’t see it, a report from analysts Plimsoll rated 122 of 845 of the largest travel retailers as ‘danger businesses’ through their increasing debt, increasing losses or falling profits.

We’ve seen on the high street in recent months how large debts can swiftly spell the end of well established brands.

The administration of furniture retailer Land of Leather at the start of the month was probably seen by most consumers as yet another failure to add to the list. But there was a significant, and worrying, difference in its demise.

Here was a business that hadn’t borrowed. In fact, it had been doing quite well until the downturn made people think about their discretionary spend.

Do you really need a swanky leather sofa if you’re uncertain about your job? Probably not. Simply put, the business ran out of money and couldn’t pay its bills.

You see where I’m going with this. While the travel industry has a long history of claiming holidays are an ‘essential purchase’, the reality is that it only holds true when those people doing the buying have a degree of confidence in their longer-term financial stability.

Cash is undoubtedly king. Thankfully, independent retailers are well placed to survive if they bear this one fact in mind. The priority for all must be to get a grip on the ins and outs of the business.

The major consortia are all offering advice from external experts, along with cash flow templates that allow you to plot your way to a profitable future.

Lead times have fallen as holidaymakers become more cautious, but that’s no bad thing. Being able to demand full payment upfront makes things easier, so do your utmost to capitalise on the current strong ski demand and the great deals available for Easter.

Agents really need to get behind the wealth of activity and enhanced terms secured by their consortium during the downturn. Sensible lending, sensible growth and sensible profits are in store for companies that take a realistic approach to the market.

Can we do it? As Obama would say: “Yes we can”.


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