What is the outlook for travel businesses which, in the absence of real government support during the pandemic, have built up a mountain of debt? Will they thrive once travel restrictions are lifted, or will they struggle to survive even when normal business resumes?
Travel Counsellors founder David Speakman says that, for some, it might be time to throw in the cards.
“In future, there will be plenty of opportunities for new companies to enter the industry, who will be able to operate without the debt that established travel businesses were forced to take on during the pandemic.
These new entrants will be willing and able to set up escrow or trust accounts and build up relationships with customers – the same customers who felt let down by existing travel companies who left them waiting for refunds for holidays cancelled due to the Covid crisis.
Existing, debt-ridden companies will have to compete with the newbies on the block, they’ll have to rebuild their reputations and repay the debt they’ve incurred, including all those Refund Credit Notes that customers will want to cash in as soon as possible.
So should these companies continue to get deeper into debt, or is it time to reassess the situation? Maybe my experience might help you decide.
By the early 90s I’d sold my small but high-volume chain of travel agencies, bought and sold a very successful restaurant, and opened a small travel agency as a hobby. Then, I opened another restaurant, which was to become a millstone around my neck.
The restaurant wasn’t a success but I felt that with perseverance I could turn it around; I’d failed to read the book about knowing when to quit. I only avoided bankruptcy because I was the main creditor, but I was broke.
I worked in the travel agency during the day, worrying about my restaurant, and in the evenings I stood at the entrance, welcoming the few customers we had. Counting the meagre takings and paying ever disproportionate bills I knew it was unsustainable, but I hoped something would turn up.
I carried on like a rabbit in the headlights, not being able to change things but waiting for some change or a helping hand that would release me from this downward spiral. I had invested too much time and too much money and, worse, my self-esteem would take a hit if I failed.
Also, I was unwilling to accept failure and being thought less of in the eyes of others, including my family.
Looking back, I had invested so much time and emotion into the restaurant that it was hard to consider ‘the now’; instead I continued to gamble to recoup my losses.
The restaurant was controlling me and I was no longer in control of my own destiny. I needed to take control. After more than a year of angst I finally admitted I had failed. I apologised to my biggest supporter, my wife Maureen, I closed the restaurant and concentrated on my small local agency.
With the restaurant gone, I was free of the constant anxiety and despair and I immediately bolted onto my existing small ABTA travel agency a low-risk, low-capital business that I named Travel Counsellors.
Not a bricks and mortar travel agency but a chain of self-employed, motivated consultants in an industry in which I had previously been successful. The rest, as they say, is history.
I am not a quitter, but sometimes you have to be pragmatic. That lesson has served me well as I’ve since recognised sooner when it was time to quit other businesses I’ve invested in.
Everyone in travel should take stock and protect themselves, particularly given the Government’s irrational policies, which clearly are only hindering, not aiding, the industry.
Be careful of taking on personal debt and be prudent in gambling on the future. Travel will take many years to return to how it was prior to the pandemic.
It’s not negativism but realism. Travel is a fantastic but financially-wounded and weakened industry. By all means continue to hang in if you have the resources. If you don’t, you need to follow Kenny Rogers’ advice and ‘know when to fold ’em’. That way you’ll live to fight another day.”
