Cash flow planning in the tourism industry is more important than ever

The global economy continued booming over the last few years and also the number of tourists continued to increase globally. Nevertheless, some travel companies and airlines have been facing difficult times. Examples include the dramatic insolvencies of Germania, Air Berlin and Thomas Cook.

How does this fit together?

The reason is simple:  the affected companies suffered from liquidity problems that instantly resulted in their insolvency. This sudden decline in liquidity happens,  when business models get under pressure, revenues fall away or costs suddenly soar. Regardless of the increasing number of travelers, tourism companies are particularly threatened by these risks. On the one hand, travel behavior has changed dramatically in recent years. Instead of long-term package tours, many tourists now prefer individual short trips. This makes it more difficult to plan flight and hotel contingents. Established distribution channels such as travel agencies are also dramatically losing significance, while new online booking and comparison platforms are increasing the market share of online bookings. In addition to some eruptive changes in consumer behavior, there are also swings in booking behavior triggered by political or weather-related factors in destination countries. As if this were not enough, travel companies, hotels and tourism companies are exposed to very dynamic competition, in which low-cost airlines, hotel groups, cruise lines, tour operators and many more compete for customers.

Hotels und Tourismus

Why is liquidity-planning so crucial for the tourist industry?

1. The seasonal fluctuations in the cash flow become visible and companies can use this information as a basis for making informed decisions.

2. In the event of threatening cash shortfalls, investors can be actively involved at an early stage.

3. Different cash flow scenarios simulate future fluctuations.

How can flowpilot help the tourism industry?

Hotels and tourism companies benefit above all of flowpilot’s intuitive planning tools. Based on the existing accounting, ingoing and outgoing payments can be planned up to 5 years in advance. All plannings are immediately visualized in a well-arranged cash flow graphic. Risks to solvency can thus be identified faster than before. This time lead creates freedom of action, e.g. to develop new financial sources, optimize spending or to adapt the business-model.

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