Among the larger U.S.-based tour operators, The Travel Corporation may be unique in publicly releasing details from an audit last year verifying Red Carnation Hotels’ value, which Travel Corporation president Brett Tollman said means that as of Dec. 31, if the company sold all of its hotels, it would net $300 million after all expenses and liabilities.
Tollman said it was the first time the company has released such information, but that he felt it was important to give advisors and clients peace of mind that the Travel Corporation will survive the pandemic.
“This is obviously a very unique, very different time,” he said. “We thought this was a very clean and simple message.”
‘This is obviously a very unique, very different time.’
After 9/11, Tollman said, the company put $20 million in cash in a lockbox account to assure advisors and travelers that it could cover obligations.
“This is much bigger and more global, so $20 million wouldn’t have done it,” he said.
Other large companies, such as the Globus family of brands, point to their refund and commission policies as proof of their strong financial standing.
“The Globus family of brands (Globus, Cosmos, Monograms and Avalon Waterways) is a privately held group of companies with the same family ownership since its inception 92 years ago, and the company remains debt-free and is in very stable financial standing,” said Steve Born, Globus’s chief marketing officer. “A clear indicator of this standing is that we are paying advance commission on early 2021 bookings and commission on letters of credit issued for future travel. These are tangible signs of our focus on the long-term and steadfast support of our thousands of trusted travel advisors through these challenging times and beyond.”
‘Globus remains debt-free and in very stable financial standing.’
Born said the payment of advance commissions was a first for Globus.
David Hu, president of Classic Vacations, which is part of Expedia, said that historical tensions between advisors and OTAs prompted his company to lay low for many years about its affiliation with the larger public company.
But since the JG Worldwide debacle, and with advisors “slowly embracing the fact that we’re not stealing their customers,” he said they decided it was time to more publicly tout the Expedia affiliation and the financial stability behind that.
That and their commitment to paying out refunds instead of pushing customers to future travel credits “has put us in good stead with many of our customers,” Hu said. “They feel more confident in working with us than ever before.”
Still, the reality is that there is “a big question mark on everybody right now. … I don’t how many travel advisors will make it past all this. I don’t know how many hotels will survive this.”
‘There is a big question mark on everybody right now.’
Hu said if he had to guess who is going to survive, “I’d bet against the smaller guys. There’s no guarantee on their financial viability.”
Brownell’s Smith doesn’t necessarily agree.
“You can look at it two ways,” she said. “The smaller companies that are family-owned, sometimes for generations, that are passion projects, could be more secure than the large corporations that are majority owned by private equity. In that case, if they have negative revenue they could be offloaded at any minute.
But on the other hand, she continued, “they have access to more capital and investment than some of the smaller operators, so it’s anybody’s guess.”
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