The Travel Industry needs to regain Trust

First let me declare an interest

I have previously criticised Abta for no longer financially protecting customers. At Abta Convention in Marbella in 2006 I explained that Abta was moving to a structure that would disenfranchise travel agents.

Travel Counsellors left ABTA in 2004 and set up its own trust to financially protect customers.

An explanation of some of the issues

See also https://www.travelweekly.co.uk/articles/42948/comment-criticism-of-abta-highlights-wider-issues

—————————————————————————————————

The industry is in a financial logjam as airlines (and to a lesser extent, hotels,) refuse to pay refunds for flights that have been cancelled due to the pandemic. These flights are the flight component of a “package” or a flight-only booked by customer or agent or operator. This has resulted in tour operators and travel agents refusing or not being able to refund the customer  because the refund usually from the airline or maybe the hotel has not been passed back to those who sold the product.

See my  video interview which explains in more detail.

Abta as the UK primary travel association voice stepped forward to navigate its members through this problem.  But ABTA’s role should be put into context.

In 1984 I was elected to ABTA’s Travel Agents Council (TAC), which held half the votes of the Association and had a 50% representation on the main ABTA board. The TAC was the heartbeat of ABTA as it’s travel agent members interfaced directly with customers and at that time a tour operator didn’t dare to sell other than through an Abta agent or “go direct”. Over the years Tour Operator Council (TOC)  members set up their own travel shops and eventually their extra votes across both categories of TAC and TOC enabled tour operators to dominate Abta.

At my first TAC meeting I suggested ABTA should develop a payment scheme for the holiday industry, akin to BSP (Billing and Settlement Plan for IATA payments). It eventually should sit as the core function and strength of ABTA. It would control the financial relationship between agent and principal and between big and small and help to protect customer money.  After leaving the industry in1987 I returned to the TAC board in 1994. By then ABTA had implemented SPS (Single Payment Scheme) but had decided to make it a non-mandatory operator collection scheme. It was better than nothing, just.

In October 2006 customer financial protection was withdrawn by Abta but its impact on customers was, for obvious reasons, not highlighted. Most agent members, apart from those who followed the politics, didn’t realise the customer financial protection had all but disappeared. Bonding remained to protect operators pipeline monies if the agent went bust.

In July 2008 The Federation of Tour Operators amalgamated with Abta and the Association had come full circle, from being a travel agents association served by operators, it had become a tour operators association served by  travel agents. Representation on the ABTA  board became less democratic leading to some members having a disproportionate amount of influence.

The industry last year was was hit by a typhoon, when Thomas Cook went bust. ABTA’s reaction was to defend the demise of its second largest member by blaming its bankers for charging too much interest on its  massive debts. It’s accounts told a story of a delusional company not addressing its precarious financial position. Perhaps a more rigorous Abta regime may have prevented many of Cooks fellow Abta tour operator members, selling through Cooks, being virtually wiped out by Cooks’ not passing on balances. Abta bonding would normally protect these operators if they did not receive balances. But money was only protected if tour operators did not give credit terms to the agent, most did yet these operators still legally had to provide the holiday.

At the beginning of 2020 the “elephant in the departure lounge” was how many operators had suffered financially at the hands of Cooks. Perhaps ABTA  could have done more to police Cooks and protect fellow members?

Abta is still resolute in avoiding clarity of its financial promise, words such as “Protection” “Support” “Confidence” is still common currency on its website and its Code of Conduct is now promoted as the reason the public should book with an Abta member. It insists the strict policing of that Code will secure the standards of business behaviour of its members, financially, contractually and  ethically.

Airline finance is at the core of the present problem as airlines have been virtually unanimous in refusing to pay refunds. Initially a cancellation issue transformed into a cash crunch as airlines stopped flying.

See my article “Don’t spend money you don’t have”

These refunds have affected not only flight-only but flights that formed part of a package, sold by an Atol holder. Atol holders that haven’t received cancellation refunds from airlines haven’t got the money to comply with Package Travel Regulations that oblige them to refund the customer within fourteen days.

ABTA’s support of Thomas Cook reflected just of how far it had moved from being an Association that valued all its members. It’s previous structure reflected the travel industry as a broad church. Agents had the customers interest at heart and kept an eye on the excesses of operators and in turn operators both big and small provided the risk, scale and product for all.

Present day Abta is a totally different animal. It’s board is made up of its CEO and two political/public sector members! Native UK companies are represented by two operators whose full accounts  are unpublished as they come within the definition of “small companies” and an agency with commissions of less than £7m. This gives an approximate transaction value for native UK board members of less than £100m.

The remaining five members on the Abta board represent companies with their financial decision-making outside the UK, two in Germany and one each in Australia, the US and Dubai. Collectively they have UK sales of just under £9Bn and worldwide sales of approximately £35Bn. Travel agents are now represented by an Australian chain of agencies plus Midcounties Co-op. In effect This makes Abta unrepresentative of the vast majority of its members and therefore unaccountable.

ABTA was in a pandemic predicament. Should it campaign against those airlines who refused to refund? It could have organised its members and along with a public outcry put pressure on the Government to pressure the airlines. Threat of expulsion from ABTA would force members to toe the line and would have shown solidity with the public, refunds might not have been available immediately but it would have highlighted the real culprits and put the industry on the right side of the issue.

But that strategy was at odds with the needs of the majority of global players on the ABTA board. By far it’s biggest member TUI has its own airline and its own hotels and has little excuse that others are withholding money. Initially it refunded but later changed its policy as the scale of the problem unfolded.

Other global players had bigger problems outside the UK and some operators who had already suffered at the hands of Cooks were financially wounded.

So Abta came up with a solution, to offer refund vouchers that would promise a refund in the future, this served to blow the whistle on the fact that the whole industry was short of cash and it denied customers their legal and contractual rights to a refund. But it  also set an example that any operator could refuse to refund and not be reprimanded by Abta. Fortunately for Abta members the legal system was also on lockdown and it saved the industry from being swept away by a public tsunami of claims. A tsunami that reflects the pent up anger of frustrated customers and the fundamental misguided decision of Abta.

These vouchers threw its agent members under the bus, being the first port of call for irate customers yet being blameless in not providing refunds.

Agents and some operators had been on the frontline, first repatriating customers and then rebooking those customers for later dates. But for those agents whose customers urgently demanded a refund,  chasing non-existent refunds now replaced by worthless vouchers just increased the wrath of customers. Lacking self-awareness Abta insisted that they would bring to book any Abta member that breached their new refund rules, but these rules are open to interpretation and refunds dates are now a moveable feast and anarchy reigns.

I’m not attacking any individuals, Most are good people and know the right thing to do but they have been placed in an invidious position by the incompetence and precarious financials of the airlines and global players. Abta has expertise and an excellent team but it serves and is influenced by global players, whom represent a small proportion of its members, albeit with large sales. These global players have now become part of the problem, not the solution. UK owned agencies and operators have been disenfranchised. Abta has  sacrificed the many for the very few. It’s reputation and that of it’s members is now in tatters just to accommodate its main influencers. Abta needs to reorganise to become more representative of the industry.

Some Abta members such as Kuoni (UK), have refunded customers indicating that ABTA’s voucher scheme was not unanimous. , Kane Pirie of Vivid Travel refunded his customers and heads a campaign to refund the customer albeit with a grace period to refund, but it doesn’t add anything to customers existing rights.

The industry should now look to find another voice, a voice that is not self serving and is closer to the customer. A voice that embraces the change in how customer money is used and a voice that is courageous and willing to criticise without fear or favour. It needs to be more democratic and to reflect the heart beat of the industry rather than the voice of the global players. The UK travel industry must be committed to change as this must never happen again. Get involved in your own destiny.

In the words of Stephen Covey:

“Without involvement, there is no commitment. Mark it down, asterisk it, circle it, underline it. No involvement, no commitment.”

*All sales figures are approximate and indicative based on the most recent filed accounts available.

Stop spending money you don’t have

I recently wrote about trust, at the core of all our relationships, it is the emotional glue at the very centre of our family, communities, religion, work and what we buy and sell.

Our great travel industry, the industry that has been so good to me and many others, is now in dire straits.

The travel industry is particularly vulnerable to a stop or slow down, as it has operated as a massive “Ponzi” scheme borrowing and using up-front customer cash to operate. Cash taken from customers booking today for future journeys, pays for travel executed today that was paid for by customers two, three or even twelve months previously.

Airlines net profits exceed $220Bn in the last ten years. In addition estimated revenue for the worlds airlines in 2019 is estimated at $838Bn. If only $700Bn is flown revenue and most of these flights are booked with full payment on average two months in advance (return flights likely to have return sector much further in future) airlines have loans from customers in excess of $100Bn at any one time.

$100Bn!!!

Yet many airlines now refuse to pay legitimate refunds to customers or to agent/Atol holders who in turn are legally bound to refund customers for cancelled “packages”. Why is this? I suspect they don’t have the money or they feel their survival depends on conserving cash and the easiest to execute is to refuse refunding. They’ve spent all that money and have been imprudent by not managing for recession or a catastrophe.

Bloomberg reports the good times have been wasted.

Instead, American blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves. At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats. As early as 2017 analysts warned of a risk of default should the economy deteriorate, but American kept borrowing. It has now accumulated a debt of nearly $30 billion, nearly five times the companys current market value.”

Atol holders, agents and operators alike that “tailor make” itineraries are little risk to the ATT (Air Travel Trust fund) but are treated disproportionately to large operators that take excessive risk by committing annually to thousands of flights and bed-nights. Some Atol holders may own an airline or own a portfolio of hotels.

Airlines and global operators have successfully lobbied governments to create an unlevel playing that fails to reflect the risk profile of the industry.

Airlines are now canvassing government for a bail out, yet they still retain billions in customer unflown revenue. If  banks or governments refuse to come to their rescue US carriers might seek Chapter 11 (Between 2002 and 2011, American, Delta, Frontier, Northwest, United and US Airways all filed for Chapter 11). In the UK Administration would apply, but in both cases customers would become unsecured creditors of the airlines for withheld refunds, in effect customers would lose their money. The liability would then lie with the Atol holder who unable to receive refund from airline would probably go bust leaving the taxpayer to stump up the money.

Regulators need to look at the whole problem. The biggest single problem is that airlines, the travel industries “Masters of the Universe” have spent money that’s not theirs. Conventional businesses only crystallise profit when they have supplied the goods. Airlines use the cash by promising to deliver good or services in the future.

The recent Air Insolvency Review is impractical, irrelevant and an embarrassment in its conclusion.

Abta has now appealed  to the government for changes to Atol refund rules. It poses as a protector of customer money when in reality it couldn’t control TUI or Thomas Cook, its two largest members, in breaking its Code of Conduct and damaging its fellow members. Abta is no longer fit for purpose, since its takeover by the Federation of Tour operators its agent members have become secondary. Now is the time for agents to become in control of their own destiny.

The industry is now suffering from its own virus and its very survival and trustworthiness is at stake.

The present bonding situation is untenable, it is unrealistic to bail out the airlines yet leave the financial liability at the feet of the Atol holder. Airlines should be bonded and be forced to place customer money in a trust account. There is no better time to enforce these changes than when the begging bowl is out.

A public that mistrusts the industry in future will be far more damaging in the long term than any financial impact at present.

Trust

I recently wrote an open Letter to Travel Counsellors regarding their attitude, self-belief and how they must tackle the present crisis.
I thought I might outline a few guidelines to protect your present business and even grasp opportunities that will expand it.
Firstly if you are a travel consultant your main advantage is that you are contactable. Yes, that is one of your advantages. Many consultants might try to avoid the customer at times but this is an opportunity to differentiate yourself from the digital agent. Contact is an opportunity so step forward and ask how you can help.
You should have built trust with your existing clients, if you haven’t then you need to. Trust is the glue that binds the customer to you.
There is actually a trust equation: (see https://trustedadvisor.com/why-trust-matters/understanding-trust/understanding-the-trust-equation)

I hope this is self-explanatory as it is the most important quality in any sale by an agent.
Credibility is your honesty, your credentials, your experience.
So what to do in the present crisis. In the words of Woody Allen “Showing up is 80% of life” in other words be there for your customer at their convenience. Listen to their problems. Keep in touch, promise to call back, give the customer a time and call back at that time. That’s showing reliability. 
If there is a problem then empathise, explain the position and try to be constructive. Many customers will rebook for a later date, some will not be willing to. Remember these are customers that you should keep for life. There is no need to be confrontational, be nice, you are nice. If you’re not you shouldn’t be in hospitality.
Reliability is always do what you promise, if you can’t, admit you can’t, so contact your customer and tell them. Honesty builds trust.
Intimacy creates authenticity, show you are human, you have a dog, children, show your vulnerability but your expertise in your core competency. 
Self Orientation is being selfless, putting the customer before yourself, even disadvantaging yourself for the sake of your customer. 
All this builds a trusting relationship, one in which a customer will want to invest in just as much as yourself. Give something to your customer such as a kind gesture, a birthday card , a small gift and your customer will want to reciprocate. Give you a booking, a referral or just strengthen that bond you are building.
As this crisis takes its toll on business it actually strengthens the human bond between people, the humanity of people, though six feet apart, is the real story of this crisis.
People are looking for emotional connection, they want you to be there for them and that will only increase in the future. What about you? Well you will love it, you will be rewarded by being fulfilled yourself emotionally and also financially.
Enjoy yourself, the world of travel has been a great place to be in the past and will be great in the future. For now, build those trusting foundations with customers, a trust that will last forever.

Coronavirus – An Open Letter to all Travel Counsellors

Dear Travel Counsellors,
I have been asked by a number of you to just write a few words about the present situation. I do it as I still hold the TC family as very special.
These are unprecedented times but if there is one catastrophe that would highlight the need for a trusted travel consultant it would be this.
Remember this is when you excel, this is when customers want and need your help and those that booked themselves will wish they’d booked through you. This why customers book through agents, a big part of the deal alongside your experience is that you will be there for them if something goes wrong.
This is exactly why you became a travel consultant. This is the time when you can strut your stuff and customers want you to. This is your stage, your competency, do your job, enjoy and take the applause.
I know it’s difficult, but put the temporary issue of income at one side. I’m sure those in control at head office will come up with measures that will help. As you know everyone is busy but don’t worry, all will be okay. Many consultants will lose their jobs and you are still employed by yourself. You are in charge of your own destiny still. Hiccups happen in business but you still have a job, you still have customers, you still have a business. Now you must look to protect it and build it stronger.
You are working for a better life for you and your family, not just for the short term but for a year, five years, ten years. So you build your business now by doing the right thing now for future business.
People will start to travel again and if you have done the right thing more customers will realise your value. Give your present customers bragging rights to brag about you. You might not be able to solve everything but your authenticity and your willingness to persevere will shine through, you will retain customers and they in turn will refer you to others.
But now is the time to be fulfilled, to make your family proud of you and be proud of yourself.
Believe in yourself, people want you to care and they want someone they can trust. Trust is what you sell.
Credibility that you are part of a bigger company, reliability that you are always there and selflessness, meaning you will put your customers before yourself are the component parts of Trust.
Call your customers and chat to them,  just keep in touch. Don’t try to sell anything, your role now is to reassure, care, help and connect as they want someone to trust. This is the time to go beyond being a travel agent, you are a caring person and a phone call when you don’t have to make it will show your humanity and you’ll feel good. Tell them where they can get toilet rolls or just tell them you are at end of the phone. Be that person you are proud of, everything will turn out even better in future. More than business you will feel better about yourself and in control.

Stay positive not just for yourself but also for others. Customers need you to be positive and so do fellow TC’s. It’s easy to slip into negative thoughts but that will just be self-defeating, why score an own goal? Remember it’s your business, you empower yourself to set the tone around you. Call your fellow TC’s, laugh at the situation and talk about the opportunities and good times in the next few months. Include every TC. Call a TC that you have not previously spoken to, just like customers some want reassurance, many want to know that out there, others are handling the predicament. A problem shared is a problem halved but better, an opportunity shared is an opportunity doubled.
You are fantastic, just make your customers have it, believe in yourself, you can do it. That’s why you took that step to work for yourself, so now work for yourself.
God bless
David

Comment: Thomas Cook’s collapse shows Atol scheme’s flaw

Original article: http://www.travelweekly.co.uk/articles/346547/comment-thomas-cooks-collapse-shows-atol-schemes-flaw

Comment: Thomas Cook’s collapse shows Atol scheme’s flaw

Just as the travel giant was unwilling to make changes to survive, the industry must be frank in ensuring this never happens again, says David Speakman

It was somewhat apt that after Abta and the UK travel industry suffered a financial typhoon with the collapse of Thomas Cook, those who lingered at last week’s Abta convention, held this year in Japan, were hit by a real-life typhoon.

Abta chief executive Mark Tanzer, in his opening address came out fighting in defence of its second-largest member going to the wall. He claimed: “The failure of Thomas Cook, in my view, is more a failure of corporate finance than a failure of travel.”

Mark went on to explain the reason for his claim was that Thomas Cook paid £1.2 billion in interest charges in its last six years, money which would otherwise have been profit. Of course, it’s a lot of money, but many would claim the company had numerous ways and opportunities to reduce its debt. Some solutions would have been brutal and humiliating. Redundancies would have been widespread. But that would have been much more acceptable than the total collapse of the business and the collateral damage – yet to be realised – to the rest of the industry.


I’m no lover of corporate finance but you don’t have to feast at their table. If you do decide ‘to dance with the devil’, then their interest rates and charges will reflect in equal measure their risk and your desperation. Ironically, Thomas Cook’s lenders have now lost their money, so it could be argued they didn’t charge enough!

With hindsight, the directors could have done things differently: a rights issue when the share price recovered; downsizing; writing off goodwill much sooner. All painful but feasible. Yet Peter Fankhauser, chief executive of the Thomas Cook Group, recently confirmed that even with the benefit of hindsight he wouldn’t have done anything different over the five years of his tenure. The genius Albert Einstein is credited with the definition of insanity as “doing the same thing over and over again and expecting a different result”.  I don’t want to be unkind to Fankhauser, as I have been similarly caught like a rabbit in the headlights of a collapsing business myself, albeit on a much, much smaller scale.

You hope something will turn up, but you have little wriggle room. You believe that persistence will win the day, when in fact a more aggressive approach to the reality of the situation would have been more appropriate.

The evidence, however, shows the Thomas Cook board believed that the appropriate course of action was not even to retain the status quo but to expand its own hotel offering. The company clearly did not have the money or headroom to succeed. It was a gamble that well-heeled companies might baulk at; with its debt millstone, Thomas Cook should never have attempted such a course of action. Reality played second fiddle to a travel brand that believed that its rightful place in the travel industry was unchallengeable. Such a high-profile travel brand found the prospect of no longer being a big player crushing. Ego played a big part in making the wrong decisions to survive.

Customer money

The elephant in the room for Thomas Cook, Abta and the travel industry in general is the mountain of debt that Thomas Cook was allowed to build. By extension, its collapse raised the issue of how most travel companies use customer money to finance their businesses.

Various estimates of Thomas Cook’s debt have been mooted. The government is being harangued for refusing to offer a “life-saving” £250 million to get the survival deal over the line. But the truth is that Thomas Cook had probably gorged on as much customer advance payments as it had in bank and bond debt. In addition it had stretched its normal credit lines with suppliers.

The reported bank debt at the end of March was £1.9 billion. Add to that a further £1.1 billion estimated for a survival deal. A revised figure of total indebtedness of £3.1 billion was suggested but that excluded the mountain of customer advance payments, which are unknown but could be in excess of £2 billion. Add to that the supplier credit proportional to such a large travel business and a much higher figure of £10 billion of debt impact across the whole group is not too far-fetched. I believe that even the industry will be shocked at the final debt liability.

The BEIS committee will interrogate the directors of Thomas Cook early this week. It’s claimed they may ask for a return of some of the generous bonuses dished out to directors over the last few years. They will also be interrogated about how they came to build such a mountain of bank debt. However, a far more important question surely hangs over the whole meeting: did the collection and handling of customer money, paid in advance for future travel, comply with correct and ethical governance? The liquidators will be able to shed more light on that.

Just as an earthquake followed the Japanese typhoon, there is no doubt that a financial earthquake in the UK travel industry will follow the Thomas Cook typhoon in the not too distant future. A company with a brand reputation such as Thomas Cook’s would demand and be given credit. It was a major player in the buying of travel supplies, and conventional suppliers of accommodation will be counting the cost of giving credit to such an ailing company. These creditors will have substantial unsecured claims.

However, the complexity of the Abta bonding of pipeline monies and the Atol scheme will be lost on many both inside and outside the travel industry.

While Thomas Cook shops sold mainly their own-brand products, they also dealt with a number of specialist operators. These operators would rely on Thomas Cook stores to collect deposits and balances on their behalf and pass that money on to them. With the collapse of Thomas Cook, the money recently collected would not be paid to the operator but the operator would still have to provide the holiday booked. In these cases, Abta would step in with its bonding that protects the pipeline money between Abta agent and Abta operator. But Abta only protects this “pipeline” money if the relationship between agent and operator is not on credit! So it’s now likely that many tour operators are now finding substantial holes in their finances that will take years to rectify.

In addition, those Atol-holders who have Thomas Cook Airlines as a component part of their “package” would now have to source alternative flights even though they have already paid Thomas Cook in advance. On the Beach estimated that it might affect their profits by £7 million in 2019, according to a report in the Financial Times.

Airline Insolvency Review

Abta’s Mark Tanzer also called on the government to launch a full consultation on the findings of the Airline Insolvency Review. This was released earlier in the year by the CAA in response to the demise of Monarch in 2017 and the lack of financial protection for flight-only.

Peter Bucks, the chairman of the relevant committee and himself a former corporate financial advisor, sets out a scheme for flight-only financial protection that would levy a charge of 50p per passenger. On page 7 of the review, under the heading ‘The Review’s Principles’, is outlined a fundamental flaw in the suggestion. It states:

The beneficiary pays for protection:

“Those who benefit ought to pay for their protection. This will require a careful balancing of the level of risk covered and the affordability of protection. The corollary of this principle is that the taxpayer’s exposure should be minimised.”

In Bucks’ ‘corporate financial eyes’, the beneficiaries of protection ought to pay for the privilege. Massive amounts of customer money are used to fund travel businesses. They lie side by side with bank debt but carry no interest charges back to the borrower. In the case of Thomas Cook, customer money is likely to be between £1 billion and £2 billion and cost the company nothing, diluting somewhat the headline interest charges that Tanzer claims.

Let’s say we call this customer money a bank and call it The Customer Bank (TCB) and let’s see if Peter Bucks’ way of dealing with customer money is consistent with how he would expect bank debt to be dealt with. A conventional bank would lend money to a borrower such as Thomas Cook. The bank would insist on an interest rate that would reflect the risk that the company poses, plus all relevant setup and legal costs incurred. TCB, however, is treated by Peter Bucks and his committee as beneficiaries of their largesse, when in fact the beneficiaries, as in conventional banking of any loan, are the borrowers, and all costs related to borrowing that money, however informal, should be at the borrowers’ expense and not the lender’s.

Peter Bucks’ scheme, just like the Atol scheme, calls for the customer who pays in advance to also pay a further premium, however small, to guarantee the safety of their up-front money. Customers get no interest payment, are unsecured creditors and are charged for the privilege of lending such sums to the Atol-holder.

The travel industry never questions its own entitlement to this mountain of free customer cash that it risks at its will. The industry gorges daily on this financial manna but fails to appreciate that customer trust is now at the centre of any transaction and customers look to the prudent handling of these funds.

Back to the review. In item 4 of The Executive Summary are the prophetic words of someone bitten once by the Monarch debacle but who believes lightning won’t strike twice. It states:

The vast majority of travellers are carried by a small number of airlines, with the top five having nearly 60% of the UK market, and 80% held by just 13 airlines. We have estimated that the likelihood of any of these top 13 airlines becoming insolvent in a given year is generally low (between 0.1% and 3% depending on the airline), but if it were to happen, large numbers of people would be affected.

Atol is fundamentally wrong

The CAA must be congratulated on a repatriation job well done for Thomas Cook customers. But continuing under Atol to allow travel companies, including airlines, to risk customer money as they do is fundamentally wrong. Apart from buying a house, buying an annual holiday is the biggest expense a member of the public might have. Buy a house and your money is placed in escrow; book a holiday and your payments can be open to the risk of incompetence, bad governance or the vagaries of the ups and downs of business.

Many travel companies have moved to protect customer money by placing the customer money in a trust. But these companies are an exception to the rule, even though there is no better way to prevent travel businesses from losing customer money than not allowing them to have it until the travel plans of the customer are completed.

In the financial crisis of 2009, banks claimed they were “too big to fail” and we know how that turned out. Now airlines claim the same, refuse to be bonded, and continue to use and risk customer money prior to delivering what the customer has bought.

As more people are able to build their own travel itineraries, they will look to book with someone they can trust to deliver on their promises – not to jeopardise all that by losing their money, with all the associated angst and inconvenience.

Of course, safeguarding client payments in this way would deny airlines and travel companies a source of cheap money, but it would lead to a more prudent and disciplined seller of travel.

To charge the customer £5, £2.50 or even 50p to protect their own money has to be a thing of the past.

The UK travel industry has, as always, closed ranks to protect those still operating within it. But we can only save our reputation for integrity, and retain the trust of customers, by being reliable and credible.

Just as Thomas Cook was unwilling to make the necessary changes to survive, we, the travel industry, must be frank and transparent in ensuring that this never happens again. The industry, including the Airline Insolvency Review, must change its behaviours in how it uses and perceives customer money. After all, we know what Albert Einstein’s definition of insanity is.

Press Release

Last night a deal was completed in which we sold our remaining interest in Travel Counsellors. We were willing to remain as shareholders but we were never offered the option to stay invested.

We wish Kirsten Hughes, Karen Morris and their staff, both in the UK and overseas, all the very best for the future.

We thank all our Travel Counsellors past and present who have been on such a great journey with us. We hope that that journey for all existing Travel Counsellors has only just started.

The sale ends our formal relationship with the company but we will always remain emotionally attached to all those who trusted in us and backed themselves.

God bless to all

David & Maureen Speakman

My Passionate Belief in the Future of the Travel Agent

Excerpt from my after dinner speech at Scottish Passenger Agents Association Annual Dinner on 24 April (Rescheduled from 1st March)

scottishdinner

“……….We have been on a fantastic journey with great memories, two visits to receive the Queens Award and meet the Queen at Buckingham Palace.

Our Canada Conference in Toronto at the top of CN Tower, our Australia Conference on the patio of Sydney Opera House and, our South Africa Conference in Mauritius in a South African Safari lodge and Speaking to 4,000 home based agents in Las Vegas.

The terrible times, the Twin Towers, nine-eleven when we thought the world was coming to an end, the financial crisis when we heard HBOS might go bust taking our financial trust money of £10m with them. The Tsunami when three of our customers drowned. The ash cloud when Gordon Brown and the Labour government repatriated Brits to Calais and not to the UK.

The success of Travel Counsellors was never due to working from home, being self-employed, having no rent or commission-only, what made the business and to this day still applies, is its credibility, its reliability, it’s intimacy and it’s passion to do the right thing by the customer.

The community and feel good factor of belonging is important but being  financially fulfilled is also important, last year the top TC earned £400k, the top 10 earned on average £240k, the top 50 £140k and the top 100 £105k.

In 2014 we decided to sell a majority stake to Equistone Private Equity which allowed the Directors of the company to share in its success. We still retain a substantial stake and we  left the UK business in the capable hands of Kirsten Hughes.

So what about the industry?

We all are rightly annoyed at fake illness claims by customers but how do customers view some of the industry’s actions?

Is it right to overbook rooms?

Is it right to overbook flights?

Is it right to cancel flights and try to avoid paying legal compensation.

Is it right to purposely separate families and charge them to sit together?

Pity poor Les Price, at 37 stone, he was asked to buy two seats on the flight from Ireland to the UK.When he boarded he found the seats were three rows apart!

Under UK law mandatory extras must be included in the price, so how can there be mandatory gratuities on cruises? To sidestep the law customers that refuse to tip have to agree to attend a course of “gratuity enlightenment” whilst on board. Who thinks of this nonsense?

Years ago ABTA’s Travel Agents Council would have stopped such nonsense.

Airports create queues by understaffing, then charge for a shorter queue. We are told Terrorist attacks will not change our lives, yet airports allow them to win daily, by creating unnecessary inconvenience to the travelling public.

Border control are no better, we arrived at Heathrow on Sunday, 30 gleaming automatic passport gates but queues as only 10 could be used as there weren’t enough staff to supervise. What a miserable experience airports offer. Obviously I exclude Glasgow airport.

I hope in future the CAA will better regulate these monopolies.

Last October the industry dodged a bullet when Monarch went bust and the Government repatriated all those stranded abroad irrespective of whether they were covered by Atol or not.

Mark Tanzer the Abta boss, said “What is the point of Atol protection if everyone gets brought home anyway? Customers will expect the same free repatriation in the event of future airline failures.”

I agree for a different reason, what is the point?

Customers having paid in advance, expect not to be stranded. It’s always amazed me that some in travel believe customers should pay to protect the loss of their own money, Customers don’t. Could you imagine the misery of being stranded abroad maybe with your family without the resources to return home and what about the reputation of the industry, what about the compassion, people have paid in good faith.

Mark’s and ABTAs intention is to create a level playing field for operators, as it suits its big tour operator members to force every agent to become ATOL bonded. Their aim is to make it as difficult and as expensive as possible to compete with them.

The Atol system is flawed, it takes little account of an industry that in the last 30 years has changed from packages to dynamic component parts and it does not protect all customers. All this complexity about packages, flight-plus, 24 hour rule,  click through, linked arrangements, misses the biggest single risk – Airlines Going Bust. In recent times XL Airways, Fly Globespan, and Monarch, have potentially stranded abroad over 200,000 customers and over 1 million advanced bookings have been cancelled.

Air Berlin in the last ten years has not made a penny and  when it went bust a few months ago it had debts in excess of £1.5 Billion.

Airlines that turn over and risk billions of pounds of customer money are not bonded yet a small “momand pop” agency has to be. That’s what happens when you can lobby a Customs Union.

So what is the future of travel and travel agents?

In the words of Mark Twain “The news of my death has been greatly exaggerated”

Forty years ago customers had little choice than to book travel through an agent. Since then with all the challenges of holiday shops, OTAs, direct-sell, self-packaging and discounting, good travel agents have still survived. The biggest casualties have been the operator holiday shops.

In future I see more agent groups giving full financial protection to customers.

Rolf Jensen a Director of the Copenhagen institute of Future Studies and author of the “Dream Society” believes that in the future, Emotion – will affect everything from our purchasing decisions to how we work with others. Companies will be measured by how they relate rather than the products they provide.

Maya Angelou, a civil rights activist once said:

“I’ve learned that people will forget what you said, people will forget what you did, but people willnever forget how you made them feel.”

Though customers can now book product themselves, can they trust who they buy from? As the world gets increasingly complex people will look for someone they can trust, someone that makes them feel safe, cared for and valued. Travel agents are the gems of the industry and have an opportunity to be the travel voice of the people. They must be willing to advise, deter, criticise suppliers without fear or favour.

Commissions should never prejudice the impartiality of an agent.

They must be organisers as well as package agents. Every OTA is looking to make their offerings more personal and credible, good agents are already there.

This is a couple of paragraphs from my intended speech seven weeks ago:-

As Google, Amazon, Facebook and Apple become more dominant, trust in them will diminish. People will become more wary and mistrusting of them as the technology becomes more persuasive and pervasive.

Already the Trump presidency is looking at the power of Amazon and the EU have already three anti-trust claims against Google.

Like AT&T in the eighties it’s likely that these massive companies will be split up by Governments who fear their power and their intrusion into all our lives.

Well time caught up and overtook my speech. Today Facebook admit to allowing others to trawl data of 87 million of their subscribers. Further revelations will prove this is the tip of the iceberg. Trust inFacebook is down by 77% and the EU announced they are looking to break up Google.

Someone once said that Trusting your private data to Google is like putting Mr Fox in charge of your chickens.

Even Tripadvisor recognises it is no longer trustworthy and has changed its logo from the “World’s most trusted travel advice” to “The Worlds largest review site”

All this increases mistrust in digital platforms. Another reason for  customers to be more wary and look for agents that build real trusting relationships.

There is a great future for the travel agent/organiser that gets it and understands they are the champion of the customer and not the promoter of the supplier.

In my travel journey I have been rewarded with so many memories of good times and great people, “even the bad times were good’.

It was never about the money but being the best and winning, I loved it.

My biggest achievement in business is that I have enabled some, albeit  in a small way, to be empowered and in control of their own destiny.

Thank you for your time.

Doing the Right Thing

Most people know what that means but depending on which side of the table you sit on the answers can vary widely.

If you are a customer then you know what you expect of a company. You expect that promised goods or services are delivered on time and in good condition and if something goes wrong it is fixed and fixed to your satisfaction.

Most companies would agree with that but the fixing is in the detail. So many companies are driven by the mantra of “shareholder value” that many fixes are sometimes shabby and minimal and are completed at the cheapest possible cost rather than “doing the right thing”.

I always operated on the basis that doing the right thing by the customer was treating them in the way I would want to be treated. Once we knew how to fix an issue there was a quick calculation that we could afford it (it wouldn’t bust the company) and we worked from there. It was a matter of integrity, reputation, pride and an opportunity to show a customer how much we cared. Of course once we knew it was affordable we would then try to reduce the cost to us but without effecting the customer fix. It was essential that we found an effective solution but always “doing the right thing” by the customer.

Of course many companies tackle problems by being a reluctant and tight-fisted fixer, but what effect does that have on your reputation? Reputation is surely part of the credibility and the marketing value of the company. .

So many companies are driven by protecting shareholder value by looking at the specific cost of fixing a problem but in the long term this impacts on the reputational value of a business.

Not doing the right thing creates mistrust in customers.

An excellent article about “Doing the right thing” from Unherd 

Doing the right thing by the customer is indeed the right thing.

ITT Odyssey Award

david itt

On 19th October 2017 I was proud to receive the ITT Odyssey Award. Below is the speech I gave on the night:

“My Lords, Members of ITT, Ladies and Gentlemen,

To receive this award tonight is such a privilege for a lad from Lancashire.

Just over seventy years ago I was adopted by John and Ada Speakman. They lived in Tyldesley a small cotton and coal town in South Lancashire.

My mother, Ada worked in a grocers and my dad worked down the pit. He was no ordinary miner as he was in charge of blasting tunnels in search of new seams of coal thousands of feet underground.

Though we lived in a National Coal Board house and he had what was considered a good and secure job his main wish for me was never to to be a miner, never to spend the rest of my life buried all day underground.

My parents aspirations were never theirs alone but their aspirations lay with me to be somebody, to achieve something more than they would ever be able to, they wanted to be proud of their son but whatever that was, I was never to go down the pit and I didn’t.

So I became a Quantity Surveyor and after leaving the building industry and starting my new business  life with my wife, Maureen as owners of an off-licence I opened my first travel agency 39 years ago

What a great industry I had entered, I’d come from a job were I had to measure how many bricks there were in a school manhole as foul sewerage lapped around my ankles as the kids flushed the toilets at playtime.

From that, I was transported into what seemed the travel jet-set, a week skiing in Switzerland, three days in New York, five days in Thailand, all free of charge, treated like kings or queens, openings, brochure launches, ship launches, breakfasts, dinners, lunches. Just too good to be true.

We are all privileged to be part of such a great industry. I remember in the early days of  being a travel agent, a long time owner described his good fortune working in travel, as having a £30,000 salary and a £100,000 lifestyle. Travel has given us all so many great memories and emotions.

In 1986 the Chernobyl radioactive cloud threatened our livelihood in travel and we sold our four very successful travel agencies. But our original travel business was only a precursor to our real success in the industry.

After a fantastic success followed by abysmal failure in the restaurant business we returned with no money to this industry we loved and started Travel Counsellors.

At first we were just pleased to survive, sleepless night followed sleepless night with not enough money to pay the bills. A loving wife who was there by my side picking up the pieces  of  my one previous business venture too far. But I loved the challenge and winning. I know it’s sounds cliched but I loved exceeding customers expectations. Even more I loved empowering the individuals, who had a passion to serve their customers but lacked the business experience I could provide.

The overriding principle I have lived and worked by is the Golden Rule,

“to treat people the way I would want to be treated”

My business ethos was governed by this Golden Rule, at Travel Counsellors we treated all with respect, many were leaving a regular salary to back themselves, I am proud to have been a part of their empowerment. Travel agents are the gems of the travel industry.

The success of Travel Counsellors was never due to, working from home, being self-employed, having no rent, commission-only. 

All those processes can be copied, what made the business and to this day still applies, is it’s credibility, its reliability, it’s intimacy and it’s passion to do the right thing by the customer. Call it customer service, customer experience or whatever it’s name. Good process should be a given but the differentiation is passion and emotion.

We all have the opportunity of being respected by our customers, we should always keep that in mind when process and profit takes precedence over respect for the customer.

In the future companies will be measured by how we treat people rather than the products we provide.

What we offer should be Trusting Customer service.

Surely an industry rightly so incensed by bogus customer  illness claims undermines its moral position by being misleading and tardy in its settlement of claims for flight delay compensation.

Also let’s make 100% customer financial protection mean just that, no equivocation, no vagueness.

Not placing customer money in jeopardy is fundamental in building trust.

I fear the cuts to services and price for flights has now reached an unsustainable level. Let’s have the self-belief to charge the right price for the services we offer.

So after a fulfilling and colourful business life mostly in travel, tonight I am sincerely proud to receive the Institutes  Odyssey Award.

award

I want to take this opportunity of thanking Maureen my wife of 45 years who throughout my life has given me permission to fail, which I have done, but has worked alongside me and empowered me to aspire to success.

I thank my family who have also worked alongside me in the business. They are here with me tonight, without them I would not be the business man or the person I am today.

I thank my friends and colleagues past and present for their patience and their loyalty.

Last but not least I thank the institute of Travel and Tourism and the industry in general for this accolade. I have loved the challenges, the camaraderie, the changes and the vision of the industry.

I’m sure everyone of us appreciates the  privilege we have to work in this great industry and luckily none of us will ever have to go down the pit.

I sincerely thank you all.”

flyer-e1510766047134.jpg