The tourism industry is worldwide one of the major economic sectors. One of its key characteristics is the fact that it is a truly international business.
What is essential to consider when collecting a debt in the tourism industry? Here are three aspects to focus on.
How to define the tourism industry
We distinguish four sub-sectors in the tourism industry (whereby there may be a lot of overlap between the sub-sectors): travel, hospitality, reservation platforms and service providers.
Travel
The travel industry is one of the largest service industries in the world. In simple terms, the travel industry provides services related to travel from one location to another. This includes services directly related to the travel itself, such as transportation, but also includes services related to catering for travelers’ needs and wants after arriving at their destination[1].
Airlines, transportation services, car rentals, travel agencies and online reservation platforms are examples of businesses that operate in the travel industry.
Hospitality
Hospitality includes any businesses where the accommodation and / or the sale of food and drink is the main source of income. This may include large hotel chains, boutique hotels, individual properties for rent, restaurants, bars, but also event planning, theme parks, and cruise lines.
Online booking platforms
An online booking system is a software solution and reservation system that makes it simple for guests to book and pay for your tours and activities online[i].
Online booking platforms are effectively online match makers in the tourism industry. Reservations can be made between travel agencies and hotels or individual properties, or between consumers directly and hotels, airlines, transportation and providers of activities and events.
Service providers
A service provider in the tourism industry can be any business that directly or indirectly provides a service or supplies products in the tourism sector. This can be related to transport (taxi companies), food & beverage (supplier of food for restaurants), activities (excursion tour providers) or events (wedding planners).
Collecting debt in the tourism industry
Travel, hospitality, online bookings, and providing services in the tourism industry is in essence a truly international business. As soon as unpaid debts arise, because of disputes, dissatisfaction with services or products provided, financial issues, or regardless of the reason, businesses in the tourism industry are often faced with the need for debt collection across borders. It is therefore important to understand the nature of international business and the tourism industry specifically, legal aspects of contracts and services abroad, and the collection procedures in order to successfully solve outstanding issues and collect a debt abroad.
The following three aspects should be taken in account when collecting a debt in the tourism industry.
Understanding of the supply chain in the tourism industry
It is essential to understand the supply chain in the tourism industry.
Tourism supply chains involve many components – not just accommodation, transport and excursions, but also bars and restaurants, handicrafts, food production, waste disposal, and the infrastructure that supports tourism in destinations[ii].
By understanding the supply chain, you will get insight in the relationships between the several businesses and service providers that make up the supply chain, the commercial and economic dependence on each other, and how to effectively negotiate and find solutions for financial issues or disputes.
The nature of commercial relationships between businesses
In the tourism industry, commercial relationship are vital. Many businesses work together with each other and depend on services or the supply of products. Business owners, executives and managers may know each other personally and for years. The commercial relationship should be valued appreciated, and can be an asset when trying to solve issues and collecting outstanding debts in the tourism industry.
Leverage for collecting an international debt in the tourism industry
Finally, it is important to understand the leverage one has when collecting an international debt. The tourism industry is a global industry whereby often the debt collection process has to take place abroad. This means there may be multiple jurisdictions involved. This means that by definition, legal proceedings are challenging – and in combination with existing commercial relationships, often in any case undesirable – and the focus may therefore be on negotiations, mediation and finding amicable solutions for disputes and payment of outstanding debt. In practice this means looking for settlements, payment plans or otherwise amicable compensation.
Conclusion
The tourism industry is a truly global business sector, consisting of travel, hospitality, online booking platforms and local and international service providers.
To collect a debt in the tourism industry often means for business they have to initiate a collection procedure abroad. Three aspects should be taken into account: understanding the supply chain in the tourism industry, the nature of commercial relationships between business and the leverage one has for collecting an international debt.
It is therefore important to work with debt collection agencies that are specialized in international claims and have expertise in the tourism industry.
At Cobroamericas we have broad experience collecting in the tourism industry, especially in Mexico, Latin America and the Caribbean region. Do you have any collection cases in tourism you need assistance with? Don’t hesitate and reach out! Contact us via Cobroamericas, on Linked-In or follow us on Twitter.
To participate in conversations about debt collection in Latin America please join the Linked-In Group Debt Collection Latin America.
[1] https://www.revfine.com/travel-industry/#:~:text=In%20simple%20terms%2C%20the%20travel,after%20arriving%20at%20their%20destination.
2 https://rezdy.com/blog/what-is-online-booking-system/#:~:text=An%20online%20booking%20system%20is,improve%20efficiencies%20and%20boost%20bookings.
3 http://www.icrtourism.com.au/wp-content/uploads/2012/09/TourismSupplyChains.pdf
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