On Holiday Group chief executive Steve Endacott has forecast a tough recession ahead for the travel industry.
Speaking at the EyeforTravel Conference held at World Travel Market, he said: “The next two years, it’s not about how much money you make, it’s about how much cash you have got. It’s about getting through to the next stage. It’s going to be hell: batten down the hatches.”
Using his experience of tough trading conditions while at MyTravel, he offered travel businesses some recommendations.
Firstly, he said business should control their cash vigilantly. “Companies do not go out of business because they fail to make a profit, it happens because they run out of cash,” he said.
If a business needed to delay paying suppliers, communication was essential, he said. “Get more people in to answer the phones quickly. Let suppliers know why they can’t be paid now and be truthful about when they will be paid. It’s amazing how much credit you can get when you do that.”
The one department you should look to hire more people was the credit control department, he said. Businesses should know if anyone they are supplying is near bankruptcy.
In terms of reducing company overheads, many companies are considering redundancies, he said. “If you are going to do it, do it quickly. Employees know it is coming, they see the sales figures. And be aggressive, because in a downturn, it’s very easy to employ people.”
Endacott also said travel business should look into partnering to drive more volume and lower overheads per sale by combining transactional systems. “Think of the deals that you do not want to do, working with your enemies over the last ten years, and what you can do to drive more volume through your [fixed] overheads.”
* More WTM 2008 coverage at www.travelweekly.co.uk/wtm2008