Travel Weekly senior editor for retail, Jamie Biesiada, spoke with Roger Block, president of Travel Leaders Network, on March 24, about what travel agency owners can do to keep their businesses afloat amid the pandemic crisis. Block recommended advisors support ASTA in its efforts to get relief for the industry from multiple levels of government. He also made suggestions on managing cash flow here and in a Forum.
Roger Block
Q: What can agencies do to hang in there and make it past this crisis?
A: This is not the time to think about anything but survival. These are just practical things. For example, you need to go down your profit and loss statement and look at every line item you have. For example, if it's rent, every landlord knows that there is an issue. Most landlords don't want to have to go out and fill an empty office. They would rather get some money today versus no money today and then have to fill an empty space. You have to talk to every one of your suppliers and see how you can cut the costs.
Cash is king, meaning it doesn't matter how many assets you have. It doesn't matter how much accounts receivable you have. It's how much cash you have to continue to pay your bills. You want to do everything that you can to preserve the cash, meaning limiting expenses. Again, we'll start at rent. If you have multiple locations, which a number of our members do, is there a possibility of consolidating? Because when you consolidate space, you're eliminating duplicate expenses such as insurance and extra phone lines.
Then, it's go to your technology vendors. Is there a way to talk to them about reducing expenses? We had one of our larger agencies, they went to their tech vendors. This isn't typical, but basically they were looking to save 20% to 25%. They're spending about $3.5 million a year on that. When you start talking about that kind of savings, it is significant. It's the little things, too. A number of people have phone lines. Can you go to a VoIP system, which is much less than landlines?
I think everyone has to look at their own compensation and compensation of the teams. You hate to say this, but with no volume, can you justify paying people for hoping when it comes back? I'm not talking about dismissing them or terminating them, but is there a chance to furlough them? Is there a chance to put them on four-day workweeks? Is there a chance to put them on half-workweeks? Is there a chance to do rotating schedules? A lot of our folks made those decisions as a team versus a unilateral decision by the owner.
Q: A lot of what you just said can be applied to any agency regardless of its size. But do you have any advice specifically for smaller agencies, like a single independent contractor?
A: Their voice is as loud with our public officials as if you were an agency of 10 employees. It really is. They can be just as proactive in calling or writing their congressmen. And don't just use a standard form, if they can -- the more they tell their own, personal story, the more effective it is. I've seen that when I've talked to various congressional leaders and their aids. They're all about servicing their voters, so that's my No. 1 advice.
No. 2 advice is pick up the phone. Call your best customers. Check on them. Because at the end of the day, you really need those customers to come back.
No. 3, start thinking about what you're going to do once the restrictions are lifted, the cruise lines are allowed to start selling. Let's say the first sailing date is -- pick a date -- you need to work backward because the cruise lines are going to need our help in filling their ships. There are going to be pricing opportunities. Who are you going to reach out to? Don't think of it after the fact. Prepare now.
Q: A popular mantra that I've heard recently from advisors and seen on social media is some version of "rebook, don't cancel." Are you seeing that, as well?
A: Yes, that's very much the case. We've actually done web-inars on how to talk to your customers to try to convince them to postpone versus cancel. From the stats I've seen, my recollection is that we're well north of two-thirds of all bookings have been rebooked versus canceled, so that's the good news. The bad news is, obviously, we're having to do the work twice. The bad news is cash flow. Fortunately, some of our suppliers have been very good about changing their commission policies and actually paying us for the double work. Not all, as we know, but many, and hopefully the travel distribution system remembers those that are trying to help us survive as we go forward.
But definitely, people want to travel. That's something that I think all of us have to continue to remember. People love to travel. And basically, travel has been reduced dramatically due to restrictions and fear. Once the fear is over, or dramatically reduced, I believe travel will rebound very, very quickly.