The travel industry is an international business sector of great economic importance. According to Phocuswright, global travel industry gross bookings reached US$1.6 trillion in 2017. As per the same research, travel and tourism accounts for 10.2 percent of global GDP. This makes the travel industry one of the largest and fastest growing sectors in the world.
The travel industry is the first in a series of blog posts about account receivables management for international business sectors.
How to Describe the Travel Industry
As per Revfine, the travel industry is concerned with providing services related to travel from one location to another. This includes services that are directly related to the travel itself, such as transportation, but also includes services related to catering for travelers’ needs and wants after they have arrived at their destination.
The travel industry includes the tourism industry, which relates to the industry centered on tourism, being the specific act of travelling to a different location, either for business or pleasure.
The travel industry may include service providers in (1) transportation: like the airline industry and car rental, (2) accommodation: like hotels, campings, bed & breakfast and shared accommodation, (3) food & beverage: like restaurants and bars, (4) entertainment, and (5) connected services: like financial services (travel insurance and travel medical plans, for example), (online) travel agencies and tour operators.
Another crucial type of service provider in the travel industry are the digital booking platforms.
Debt Collection in the Global Travel Industry
To effectively collect debts in the global travel industry, it is important for the debt collector to take the following into account.
Understanding the Travel Industry
The travel industry has its own “eco-system”. It generally consists of a chain of several international and / or local service providers. Several of these service providers earn on the same transaction – whether that is a booking for a vacation or a business trip, or the actual stay of an individual at a certain location. These service providers are often part of an existing network, whereby business owners, executives and employees know each other well. Many people have a lifetime career in the travel industry. This inevitable affects the style of debt collection and means that the debt collector has to understand the travel industry’s eco-system in order to be successful in collecting.
Understanding International Business Dynamics
The travel industry is almost by definition an international industry. A large part consists of people traveling to a location abroad, for vacation, for business or for other reasons. International debt collection differs in essential ways from local debt collection, as the claims are cross-border, covering multiple jurisdictions, business habits and sometimes languages. Options to legally enforce payment of international debts is substantially more complicated than looking to recover a local debt through legal proceedings. Therewith leverage changes and the focus shifts to amicable collections only. The debt collector must be aware of this and must be familiar with international debt collection in order to successfully collect in the travel industry.
Solution Minded Approach
Given the previous two points, debt collection in the travel industry means that the debt collection has to be solution minded. The interests of creditor should be taken into account, but also the relationship creditor-debtor, the fact that the focus should be on amicable collections and that leverage may be limited, but on the other hand, in case the commercial relationship is still there, that often the debtor depends on the creditor within the travel industry eco-system and that the debtor has a clear interest in solving issues. The debt collector often acts as negotiator or dealmaker, instead of “just” collector.
The travel industry is one of the largest international business sectors. The travel industry is all about providing services related to travel from one location to another. In order to provide debt collection services for the travel industry, the debt collector has to understand the travel industry, international business in general, and has to be solution minded.
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