Q – We try to keep up with travel industry publications and have been surprised by the failure of Thomas Cook and the reported financial issues with Cox & Kings, which is, I believe, the oldest travel agency in existence. You keep hearing that travel agents are being put out of business by the internet. We’ve just started a new relationship with a new local travel agency and I suppose we’re wondering how we might know about their financial solvency. How do we know our money is safe? Is it appropriate to ask for financials?
A – Several broad questions here. Let’s start by saying that Thomas Cook and Cox & Kings are not travel agents. They would be designated as tour operators. Cook was involved in charter flights, group tours, charters, and worldwide group packages. It is a risky business involving payments of huge amounts of money upfront. For example, two of the major tour operators specializing in travel to China declared they were closing their doors last week in anticipation of a complete decline in potential tour groups to Asia.
After the last financial crisis in 2008/2009 it is estimated that 40% of the travel agents in the United States were put out of business. The vast majority were selling inexpensive package travel that was easily replicated by OTA’s, (Online Travel Agencies).
Since that time, the income of travel agents has risen and there is now a serious shortage of qualified vacation agents, particularly those that cater to upscale overseas travel. Tour Operators take a much larger financial risk than travel agents who simply act, for the most part, as intermediaries in the booking of other people’s products. They are the distribution channel for the tour operator.
We certainly think that a discussion of the financial stability of any company you work with is appropriate although asking for a written accounting statement might be a tad much. It is good to know if any funds paid to a travel agent are kept in escrow until the time you travel. Here are four questions you should ask any travel agent with whom you are considering a relationship:
01 – How do I know that you are placing my interests ahead of those of your agency’s financial interests?
02 – What won’t you sell – and why?
03 – Have you worked within the travel industry before becoming a travel agent and in what capacity?
04 – Will you be wearing a bathrobe when I speak to you on the phone?