Rules around how the travel industry operates financially need to change in order for agents to regain their reputations in the future.
That was the message from The Travel Village Group chief executive Phil Nuttall, speaking on a Travel Weekly Webcast, who called on the trade to prepare for similar future crises to the current pandemic by creating a ‘new look’ industry.
Nuttall argued more agencies would have to switch to alternative financial models, such as trust funds, in which customer money is set aside until the client has travelled.
Travel firms have come in for heavy criticism in the last three months because of delays in repaying refunds back to holidaymakers, often because monies have already been paid on to suppliers, and because of their lack of reserves and reliance on cashflow to run their businesses.
Nuttall said: “It’s got to be our aim to bring this industry and its reputation back to where it needs to be. We have to change the regulations. In the next two years, it’s got to be done.
“We have to get our bookings back and get cash back into the system and then we have to look at it and build a ‘new look’ industry; something we are proud to be part of. That cash has to be there until the customer has travelled.”
Triangle Travel managing director Rob Kenton agreed the financial model needed to change but said it was unlikely to happen.
“It does need to change but it won’t happen. We will get back to normal and in six months’ everything will be forgotten,” he predicted.
Kenton, who said he was considering a trust fund system for his agency, said his biggest fear was that merchant facility providers would become “jumpy” as a result of the current crisis and pull their services from agents.
He added: “If you don’t have a merchant facility you cannot trade. That scares the living daylights out of me. I feel that us, at the bottom [of the chain], will feel the pain.”
Helen Dooley, partner of More Travel, which already operates her business using a trust fund model, said: “It’s worked really well for us, so customer cash is all protected. I have never traded off clients cash flow.”
