Seminar hears how many established brands have been “on hold” for 18 months
Travel Weekly Start-up Webinar: Grasp the opportunity of lower barriers to entry
Aspiring travel agency owners and tour operators have been urged to set up business during the pandemic as some entry barriers are currently lower than they normally would be.
Establishing a travel business in a market filled with companies that have “built a brand and reputation over a number of years” can be difficult, Travel Trade Consultancy (TTC) director Matt Purser said during a webinar to help start-up firms.
However, he added that a lot of established and well-known travel brands have effectively been “on hold” for 18 months during the pandemic, and therefore the barrier for entry is not as “powerful” as before.
Speaking alongside several industry experts on a range of issues including liability and insurance, supplier agreements, new regulations and financial protection, Purser said: “People may question why you are starting a travel business, but actually some of those barriers to entry now prove advantageous to start up.
“One of the big [barriers] is around brand identity. A lot of travel businesses have built up a brand and reputation over a number of years and that has a huge amount of value.
“As a new business, it can be very difficult to break down that barrier. But a lot of those brands have been on hold for 18 months and the customer loyalty they’ve had before has diminished because customers have not be able to travel. That is one barrier that has not been as powerful in the past.
On refund credit notes (RCNs) and financing debt, he added: “Starting a travel business without any historic debt may also prove advantageous to a start up in these times.”
Purser said trust accounts set up to protect customers’ monies, are not always the best financial model for a travel company, adding: “There is not a one size fits all.”
“There are the travel and linked travel arrangements 2018 that we have to comply with in the UK,” he explained. “You need to show how you’re going to financially protect your clients and that could be with a bond, insurance taken out by the tour operator and then there are trust accounts.
“Do your research. If you’re going to go down the route of a trust account but all of your suppliers want paying as soon as the booking is made that trust account is not going to work for you because that money is sitting in a separate account.”