Do you know if your host agency is financially solvent? Do they have cash reserves to survive the downturn? Do they play the float by slow payment of their agents and their suppliers? These basic questions have taken a new urgency with the prospects of an extended economic downturn.
Travel agents are constantly advised to know the
suppliers they deal with, including their financial status, to avoid
bankruptcies and passenger stranding. But few host agencies, including
many of the best-managed are candid about their financial condition: a
reality that should concern agents.
This lack of transparency –
candor and honesty may be better words - lies at the heart of the
problems of Joystar/Travelstar who faces bankruptcy and YTB Inc. who
has greeted legal action by the attorneys generals of California and
Illinois with silence.
While YTB is publicly traded and subject
to SEC regulation, so too was
Joystar/Travelstar. Yet agents have had to go to a federal bankruptcy
court to get a basic accounting of the assets, if any, that Joystar/Travelstar
has.
Recent Congressional hearings on the SEC’s oversight powers
and competency have underscored the weakness in SEC regulatory powers
and procedures. Many observers see the SEC as ineffectual. The alleged
Ponzi scheme sponsor Bernie Madoff, who is reported to have bilked
the public of $50 billion, underscored this. Madoff was on the board of
the National Association of Securities Dealers (NASD) a major
securities industry group.
Most certainly, the multilevel and network marketing firms that make online offers of lucrative careers in travel sales should be held accountable with greater transparency and accurate, understandable and verifiable statements of financial conditions.
For the responsible, professional home-based independent agent, the financial integrity of their host is a
critical issue. Will commissions due be paid promptly? What is prompt? Daily, weekly, monthly or longer? Are agents advised of delays? What is excessive? Can they deliver the services promised?
Two
major associations – the United Sates Tour Operations Association
(USTOA) and the National Tour Association (NTA) have bedrock programs
to assure the solvency of tour operator members. Membership is
expensive to be sure. But it gives the agent/seller of travel and
consumers reasonable and needed assurances.
Financial stability
also impacts the host’s ability to invest in marketing, technology and
training essential to independent agents and to the host’s ability to
deliver quality services. A solid reference point for home based
independent agents and hosts is the Professional Association of Travel
Hosts (PATH).
A host agency’s financial
integrity should not be an after thought but at the heart of its agent
recruitment and retention program. One of the few benefits of the
current economic crisis may be encouraging greater candor and
transparency in financial reporting in an industry where trust and
integrity is paramount.