Explorer Travel founder and director Steve Wood outlines the impact of the crisis on his business – and the lessons he has learned about tour operator partners
Apart from the financial crash in 2008, Explorer has consistently increased sales and profits since I started the business in 2005.
We achieved sales of £2,000,000 in January and February 2020 and we looked set to have another record year. As soon as the March lockdown was imposed our fortunes were turned upside down.
Our sales are 80% down on 2019. We have lost 15% of our franchise network and we have not made a profit since December last year. It’s been a fast and catastrophic drop in bookings.
We stopped recruiting new franchisees in March as I felt that it was actually immoral to take on non-experienced recruits in this crisis as they would inevitably fail.
To assist financially strapped existing franchisees, I suspended all monthly charges for three months (April, May, and June) and also suspended the repayment of reversed commissions caused by the mass of cancellations. We still have homeworkers that owe reversed commissions from March and have agreed to a repayment plan allowing them a breathing space to generate future bookings and commissions.
The stress caused by the pressure of work processing cancellations and rebookings and chasing refunds for angry clients also took its toll and we lost our administration manager after 13 years of service. Fortunately, this is the only management position we have lost.
Refunds have been the biggest headache for our administration and our homeworkers. Too many tour operators have failed to support us.
While this is a tough time for us all there is no excuse for any supplier to mislead ourselves or clients regarding refunds or force Refund Credit Notes on clients when they insist on a cash refund. Being honest about their financial situation and inability to refund would have helped us and our clients better understand the situation and reduce frustration and stress.
One cruise line has not sent us any cancellation invoices since March! Another tour operator failed to reply to multiple emails and repeatedly lied about when clients would receive a refund. Yet another simply does not reply to emails.
We will no longer support any tour operator that has failed to support us during this crisis. That is quite a long list.
As we approach the end of 2020 and look forward to a better year in 2021 we decided to offer a franchise package designed specifically for experienced agents who have recently lost their roles elsewhere. Understanding that they will be cynical about joining any travel business during this crisis, the opportunity is free for the first six months, allowing new franchisees to test drive it before fully committing to Explorer.
I do not expect Explorer to make any profit whatsoever until March or April 2021 – assuming that the situation does not deteriorate but begins to improve. Until we start making a profit I will continue to personally fund the losses which have so far amounted to over £100,000.
This year’s experience has highlighted the vulnerability of the business model of the majority of tour operators and travel agents. Profit margins are too low and balance sheets too weak. Too many rely upon cash-flow rather than genuine profit. In the next few months, many more tour operators and travel agents will fail when furlough ends.
2021 has to be the year when travel companies will be forced to redesign their business models if they are to survive any future crisis. Right now I feel like a gambling addict who believes that the next bet will be the winner! Despite knowing the risks, I will continue to bet on the success of travel in 2021.