Bob Joselyn is president and CEO of the Joselyn Consulting Group, a travel and tourism industry marketing and management consulting firm in Scottsdale, Ariz.
The first time I was in Zurich I was speaking at an international conference of AAA Club presidents. There were over 200 in attendance. On the first day of the conference, Oct. 19, 1987 -- Black Monday -- the stock market dropped 22.6%, the largest one-day stock market decline in history.
To say that there was panic among attendees is an understatement. By Wednesday, over half had left to get whatever money they had left out of the market and stash it under their beds, bury it in the backyard or protect it in some other way.
I am scheduled to be in Zurich again on May 28.
Unless the politicians in Washington can reach a resolution by June 1, the U.S. may default on its debts for the first time in history. Predictions are all over the place, but the worst could be a record drop in the market.
What could this mean for the travel industry and for the agency segment? What if anything can or should be done to minimize the potential damage? We can all hope members of Congress can see beyond their desire to win at political arm-wrestling at a cost to millions around the globe, but hope is not a strategy.
In spring 2008, I had the travel agency owners who are part of my financial benchmarking and best practices groups do a homework assignment: Spell out in detail how you would handle a 25% loss in revenue. There were complaints just short of death threats that I was wasting their time, as the travel industry was on a roll. By that fall, the complaints turned into thanks as the recession took hold. The members who took the homework seriously reacted faster to the downturn and made better adjustments to their businesses than those who had not thought about a Plan B.
But even if a government-debt default is avoided, other crises could impact us: Another pandemic, a financial crisis leading to recession, global conflict. It's not unreasonable to assume that a meaningful amount of the wonderful future travel plans on agencies' books could disappear overnight.
Which is why it's of utmost importance to have a Plan B in place for when things take a turn for the worse.
The best component of a Plan B is something agency owners should have had in place for some time now. Certainly, one of the most important lessons travel agencies should have learned from the Covid pandemic was the necessity of having cancellation fees for undoing all the work they had done.
Agencies that have robust cancellation fees will certainly experience a decline in revenue, as travel plans may be canceled in the face of a crisis, but they will have some revenue to compensate advisors who may be spending more time undoing travel plans than making them.
So, is that it? If you don't have a cancellation-fee policy already in place, are you totally out of luck? No. Here are four other things to consider, just in case:
• First, have a discussion with your advisors about the possibility of the consequences of major current events. This won't fix anything, but it will help them to mentally prepare for the possibility, which is much better than being blindsided. Consider the best responses to clients who might want to cancel their future travel in a fit of financial panic.
Recognizing and acknowledging the possibilities is a demonstration of thinking-ahead leadership. Those around you lose some respect for the captain who failed to think there might be an iceberg ahead.
• Second, for those clients who decide to cancel, manage their expectations about the process of obtaining refunds on short notice. In the worst-case scenario, it won't only be agencies dealing with cancellations but suppliers, as well.
• Third, be ready to do everything possible to maintain employee and IC morale.
• Finally, one of the lessons learned in the 2008-2009 recession is that many suppliers responded with the best offerings in decades. While the market may shrink, there will still be value and price points that will attract a segment of travelers.
The worst part about a Plan B is not having one at all, even if it can't do much more than minimize the pain. The best thing about having a Plan B is that you wasted your time preparing one and get to throw it in the trash. If that's the case, you are free to stick a pin in a Bob doll.
Fingers crossed; I'll be hoping my stay in Zurich next week is better than my first.