Covid-19 will force a tightening up of travel’s “comfortable circular economy”, according to the founder of G Adventures.
Joining a Travel Weekly webcast from Toronto, Bruce Poon Tip said the refund issue is “troubling customers”.
He said: “But as tour operators, from the minute a customer pays a deposit and says they want to do that tour, we start spending money – whether that’s on leaving deposits on hotels and transportation, arranging staff to run that tour and create amazing experiences in the future, or having staff on the phones to answer all your questions taking bookings.
“So, we’re all in the circular economy. And we’ve all been very comfortable, especially as we’ve had 30 years of double-digit growth. You get a bit lazy with regards payment terms and flexibility with all of your operators.”
Poon Tip added: “This money is just kind of circling around as people book trips, and then when it comes to a complete stop, there’s panic because everyone grabs their piece back. It’s like a game of Jacks – everyone is grabbing everything back and you suddenly realise you have to tighten all that up.”
He admitted the current situation had led to some customer frustration.
“I had an exchange on social media with a customer who was saying they wanted their money back because they couldn’t take a tour because of coronavirus, which wasn’t their fault. And I replied that it wasn’t my fault either,” he said. “It’s hard because there’s no way anyone could have anticipated that things could come to a complete stop.”
Poon Tip said G Adventures followed all legal guidelines in every market it operates in terms of holding customer money in trust, but said: “We’re allowed to release that money at certain periods when we are getting prepared to set up trips.”
He said he had all kinds of payment terms in place, with thousands of very small-scaled businesses around the world, often giving them “generous” terms “to help them make their businesses a success”, meaning many owe his company money.
And he said G Adventures was also extending credit to agents in some cases. “Individual agents we deal with is not a problem,” he added. “But we deal with big groups like Trailfinders, STA [Travel], Ensemble and Virtuoso and we reconcile payments after travel with all of those, so we don’t actually have your money on the day you travel, and we’re extending credit to you.
“So we’re also a credit facilitator in those cases, and that’s tens of thousands and tens of millions of dollars that we put forward to make your trip happen for you.”
Poon Tip concluded that the whole situation would have to change.
“It’s just the way the business has been, but we’ll have to look into all of this stuff because it all works swimmingly when things are fine but no one ever stopped to think, ‘what if a zombie apocalypse actually happens and everything stops tomorrow?’. And here we are.”
