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Bath Travel operator Palmair offers discounts for upfront payments

Bath Travel’s tour operating division Palmair is offering clients a discount for paying upfront for their holidays, amid general industry concern over cash flow.


Bath Travel director and former ABTA president Stephen Bath said maintaining cash flow was likely to be a challenge for the trade after summer sales were hit by the recession.


“Our common enemy is mid winter. This is going to be a very bleak time for many travel agencies, and the issue of cash flow is more important than ever” he said.


The company, which has 67 retail branches across the south of England, is planning a number of initiatives to combat the problem.


Customers who book winter holidays with Bath Travel’s own tour operator Palmair are being offered a 5% discount if they pay the full amount straight away. So far, 30% of customers have taken up this offer, which is also open to other agencies booking in the area. Palmair may continue the promotion for summer 2010 holidays.


“The promotion has been very popular for winter. People are getting little interest on their savings, and they are used to paying in full when they book with low-cost airlines. We are just emulating the competition,” he said.


Bath Travel is also driving sales of round-the-world cruises which depart in February and March, since they have to be paid for 90 days in advance. The company, which plans to open two new agencies at Bournemouth airport later this year, has seen an improvement in business this month.


“We are up 3% for September for the first time in 10 months with the cruise side performing well. There is optimism about the cruise market with capacity pouring in. It is the only growth market,” said Bath.


However, Worldchoice commercial director Bill Pickering said discounting for early payment might be more complex than it sounds. “I would not encourage agents to bring forward balance payments by offering a discount. This could lead to the agent receiving significantly more client monies than would be covered by their bond in the event the agency failed,” he said.


“There could also be some issue as to whether the agent was operating outside the terms of the agency agreement with operators, or the ABTA guidelines, which could impact the level of protection customers receive.”


MacIntyre Hudson principal Andrew Burnham said agents should be careful when discounting. “Right now is a dreadful time for the industry. You can offer a discount to incentivise your customers to pay in full now, but it means throwing away valuable future profits. Make sure you leave an element of profit.”


He added: “Apart from getting the money in, you also need to ensure that your non-essential expenditure is reduced. Tough choices are needed.”


Meanwhile, a survey has revealed that cash flow worries as a result of increasing late payments are causing small businesses the most concern. Some 23% of small businesses said cash flow was a “key issue” in surviving the downturn, according to the latest Economic Downturn Panel survey carried out by the Forum of Private Business.

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