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.