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September 2022, Virtual
Mark Supperstone is managing partner at business advisory firm ReSolve
Of all the business sectors that suffered horribly during Covid, travel stands out. The impact of the pandemic on this sector is well documented, but now, as travel recovers, many individuals and organisations are additionally being affected by rising inflation, increasing fuel costs and geopolitical unrest.
Nevertheless, as Covid restrictions lift across the world, executives are again discovering the importance of face-to-face meetings, and business travel is starting to make a comeback. If you are a corporate travel manager and are considering which company to appoint as your TMC or wondering whether your incumbent provider is still robust enough to provide a good service, then there are a few things you can look out for.
A company’s health
First and foremost, a company’s financial health can tell you a lot about their ability to stay solvent and active. Companies House is available to everyone and provides a useful starting point for anyone looking to find out how strong a company’s credit is.
Now, clearly the last couple of years have not been kind to travel companies, so you would imagine that they would have borrowed what they could to stay solvent, but how much debt they have against their earnings is a good indication if they can make it back into the black.
There are also other agencies which provide financial data on companies, and it is well worth spending some time on the internet gathering as much financial information as you can before proceeding with a provider.
Furthermore, a company’s ownership can tell you a lot about the financial health of the organisation. For instance, if a business is backed by private equity, then more often than not that company will have a decent amount of cash resources which can be used when it experiences a period of reduced trading, such as a lockdown. The business can therefore rely on internal capital to pay suppliers and staff etc, without running into too much trouble.
Marketing and brand
How much a company spends on its advertising and other marketing tools is also a useful benchmark for measuring a company’s success and longevity, in the sense that it is a clear indicator of whether they have surplus capital – a sign of a healthy company.
Generally speaking, when a company falls into trouble, advertising and marketing are some of the first things a business will cut back on to save money. Additionally, things such as Google reviews can be helpful, if viewed with a healthy measure of scepticism: they can give you an indication as to whether there has been any deterioration in the quality of the company’s service, and whether key personnel have left.
The longevity and brand presence of the company matters too. Long-established companies with a strong and well-loved brand in the industry often can expect more forbearance from creditors and greater goodwill to make it through tough times.
Any company that you are considering working with should be a member of a recognised trade association, such as ABTA. While this again does not mean a business is immune to falling into administration or liquidation, it does show that the business complies with best practice standards, and you should regard it as non-negotiable when looking to appoint a travel provider.
While these are all good indicators of a company’s health, when booking group travel, the recommendation would be to ensure that your insurance has you covered in the event your supplier enters an insolvency event. Over time, I believe corporate travel will become prevalent again and companies will return to better financial health.
• The opinions expressed within the content are solely the author’s and are based upon information they consider reliable.
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