Take decisive action early to avoid your business hitting trouble, says Mark Supperstone, managing partner at ReSolve
Tragedy is an emotive word, but it’s the right one for what’s happening in the travel industry right now.
The mainstream press focusses on the woes of giants like easyJet and Thomas Cook, but I work mainly with small to medium sized travel agents and tour operators. These SMEs are the backbone of the British travel sector, and they are suffering.
For example, we have just been appointed as administrators to VIP Ski, an excellent tour operator of quality, good value skiing holidays. The owner of the business is motivated by nothing other than his passion for enabling people to have amazing and memorable holidays. To see that life’s work threatened by Covid-19 is heart-breaking. Fortunately, we have received a number of expressions of interest in the firm and we are working fast to find a solution that will hopefully enable the business and/or assets to be saved by a purchaser.
Then there is Go Travel Ltd, an independent family-run travel agent based in South East London and Kent. The family and their team have worked tirelessly for years to build up a loyal and enthusiastic customer base. But they had to appoint us as liquidators, and now we are working to secure a sale of the assets and achieve the best possible outcome for all the company’s stakeholders.
So the outlook seems pretty bleak. But my message to the owners of independent travel agents and operators is one of hope. The ReSolve ethos is that liquidation is not the inevitable outcome for a severely troubled business. If you take action early, there are a number of options which could ensure a future for your business.
ReSolve has carried out projects for struggling business including refinancing and restructure; selling all or parts of the business, and undertaking a fundraising. If your business model and offering are fundamentally sound, then these are all viable options, no matter how low your cash or how stressed your balance sheet.
So what do you, as a travel business owner, need to do?
Firstly: take a cold hard look at your numbers, at cash, assets and liabilities. Do not fall into the trap of thinking things will turn around after Christmas. Look solely at current conditions and project three to six months ahead.
Secondly: have honest conversations with your creditors, investors and suppliers. No one likes surprises and everyone appreciates being kept in the loop. They will want to work with you and find a long-term solution that benefits everyone, not just a short-term that benefits them. If you find the prospect too daunting, then appoint a third-party adviser to negotiate with your creditors.
Thirdly, and importantly: speak to your customers and employees. While it may feel kinder not to share bad news with staff, keeping your employees fully-appraised shows them they are highly-valued and you trust them. This, in return, makes them want to be there for you. Your customers will be another set of strong ambassadors. They may even be willing to support you in a financial or non-financial way.
If insolvency or closure are the only possible options left, then appoint an adviser who will work hard to maximise the value of your assets and to retrieve as much value as possible for stakeholders.
It’s often said that Covid is going to change the UK travel industry forever. I think that’s true; but I also think it will change in a way that benefits independent travel agents and operators. People may end up travelling less often, but there’s likely to be a greater emphasis on creating bespoke, memorable holidays, with the kind of personal service which only independents can provide.
It really is darkest before the dawn. Try not to shy away from taking tough decisions early: the sooner you take action, the more likely it is that your business will survive and, eventually, thrive.