Todays Panelists George Goodchild Russell Walters Mike Massaro - - PowerPoint PPT Presentation

Today’s Panelists

Russell Walters

Adventure Travel Trade Association

Mike Massaro

CEO, Flywire

George Goodchild

Head of Integrations, Flywire

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About ATTA

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About ATTA

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• The Adventure Travel Trade Association is a vital leadership voice

and partner for the adventure travel industry around the world.

• A travel trade organization for the adventure industry with a

vested interest in the sustainable development of adventure tourism.

• 1,300+ members in 100 countries worldwide, from tour operators

to tourism boards, specialty agents to accommodations, and more.

• ATTA delivers solutions and connections that propel members

towards their business goals and the industry toward a responsible and profitable future. Learn more about us: adventuretravel.biz/about/

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Delivering on life’s most important payments

550+

FlyMates

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Offices globally

240

Countries & territories

150

World currencies

2,000+

Clients

$16B

Money moved

99%

Client retention

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Who we serve:

2,000+ clients, 99.9% Retention

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Global Payment Network

$7B moved across our network annually

Webinar Contents

1. COVID-19: Current Global Outlook 2. The Long View: Economic Recovery Scenarios 3. Financial Strategies and Tactics for Businesses During a Downturn 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation 5. Q&A

DISCLAIMER The useful information shared within this webinar does not constitute “professional advice”. The information presented is meant to show a range of options available to adventure businesses to address economic

• challenges. If you require professional advice on the appropriate course of action for your business after learning

about the options today, we urge you to consult your (financial/legal/business) advisors, privy to your individual business’ history and circumstances.

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The full report is available to download for free at adventuretravel.biz/research

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• 1. COVID-19: Current

Global Outlook

63%

decrease in demand for Q2 over 2019 Q2

“(Adventure) organizations are experiencing stark drops in business with consequences anticipated to last throughout the calendar year.”

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• 1. COVID-19: Current Global Outlook

84%

• f organizations have

a negative outlook

• n business

prospects over the next calendar year

68%

increase in cancellations for Q2

• ver 2019 Q2

38%

Estimated decrease in business volume

• ver the next

calendar year

“This translates to organizations experiencing strained

cash flow, layoffs, loss of revenue/income as well

as many other consequences negatively impacting adventure travel firms across the world.”

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• 1. COVID-19: Current Global Outlook

• 2. The Long View:

Economic Recovery Scenarios

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• 2. The Long View: Economic Recovery Scenarios

“Given the current global outlook,

a recession is inevitable.” But what will the recovery look like?

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• 2. The Long View: Economic Recovery Scenarios

A V-shape or U-Shape Recession

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• 2. The Long View: Economic Recovery Scenarios

Additional Recession Paths: L-Shape or W-Shape

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• 2. The Long View: Economic Recovery Scenarios

Uncertainty around the nature of the virus and the lack of vaccine and proven effective treatments make it impossible to predict definitive outcomes. Economic uncertainty prevails for the time being.

• 3. Financial Strategies &

Tactics for Businesses During a Downturn

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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“The evergreen expression “cash is king” holds even greater importance during an economic downturn, when revenues may dry up quickly and expenses, fixed and variable, remain.” Thus, to weather the economic storm, it is vital for businesses to

a) conserve cash, b) borrow cash, and/or c) generate cash,

depending on individual businesses’ circumstances and needs.

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But first, it is essential to understand your business’ current financial situation.

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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Review Your Business’ Financial Standing

1. Gather data on cash at hand, receivables, and payables for the year ahead 2. Run the initial cash flow projection report a. A cash-flow projection report charts the movement of cash in (cash at hand + receivables) and out (payables) of your business 3. Test multiple financial scenarios a. Software such as Fathom and LivePlan are suggested. They integrate with major electronic accounting software b. Ensure your scenarios are rooted in reputable and best available data or projections at the time of financial planning.

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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Examples of Scenarios Rooted in Data:

1. My key source market will lift outbound travel restrictions on May 30, 2020, per government announcements/ expectations, and 30-50% of the demand will be back per expert projections. 2. Travelers will feel confident to travel again, at least nationally, in my key source market come August 2020 per a consumer confidence report/research. 3. The global market will be back to 2019-equivalent demand by May 2021 per new economic recovery projections.

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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Once you are armed with the information

• n your cash balances in various scenarios, you are

ready to conserve cash, borrow cash, and/or generate cash, depending on your business’

circumstances and needs.

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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• 3. Financial Strategies and Tactics for Businesses During a Downturn

Conserve Cash “Conserving cash is typically an immediate priority for businesses big and small during a downturn. Two ways to accomplish this for adventure travel businesses is to control costs and minimize refunds.”

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Conserve Cash

• i. Cut operating costs and expenses

1. Classify all your payables and expenses into the following quadrants: 2. Justify each expense 3. Talk to your staff 4. Speak with your vendors and lenders 5. Make suitable cuts to expenses (non-critical first)

Expense Type Urgent (<90 days) Non-Urgent (90+ days) Critical expense 1 2 Non-critical expense 3 4

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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Conserve Cash

• ii. Minimize refunds and credit card chargebacks

1. Offer alternatives to refunds (rebooking, vouchers, etc.) 2. Review the signed terms and conditions and rely on them to minimize refunds and chargebacks

a. Force majeure b. Cancellation and refund policy

3. Politely ask if your client purchased a trip insurance policy 4. Respond to all improper credit card chargebacks 5. Put safeguards in place immediately to minimize refunds and chargebacks

NOTE: Ensure you are in compliance with local laws and regulations wherever you operate in the world, as there may be some markets where during a grave event, such as the COVID-19 pandemic, the law concerning packaged travel refunds may supersede the signed terms and conditions, such as in the European Union. In these cases, it is best to urge clients to defer their trip with your company or accept a travel voucher.

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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• 3. Financial Strategies and Tactics for Businesses During a Downturn

Borrow Cash “If your business is unable to make ends meet, it is valuable to consider borrowing, capital partnership and consolidation options to funnel cash into your business.”

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Borrow Cash

1. Disaster assistance loans and programs 2. Line of credit 3. Other credit and loan sources

a. Friends/family/lending institutions/charge cards/credit cards

4. Seek out an investor 5. Other considerations

a. Merger/acquisition/declaring bankruptcy

• 3. Financial Strategies and Tactics for Businesses During a Downturn

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• 3. Financial Strategies and Tactics for Businesses During a Downturn

Generate Cash “It is equally vital to consider ways to infuse cash into your business without considerably increasing your liabilities.”

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Generate Cash

1. Collect on receivables 2. Review your business insurance policy 3. Sell (liquid) assets 4. Sell “book now, travel later” trips with flexible booking terms, if and when appropriate 5. Seek new source markets if you are a supplier 6. Sell local trips if you are an outbound operator/travel advisor

a. Resell DMC/supplier products on an affiliate/commission basis, OR b. Develop a local, day itinerary

7. Sell digital products

• 3. Financial Strategies and Tactics for Businesses During a Downturn

• 4. Beyond COVID-19:

Building An Economically Resilient Adventure Operation

• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

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“Once your business gets through the current challenge, it is vital to put safeguards in

place for economic resiliency so your business can thrive in both the good times and bad.”

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• i. Refine Your Business’ Financial Planning and

Reporting Procedures

1. Prepare an annual budget 2. Review these three critical financial reports on a weekly or monthly basis

a. Budget vs. actual b. Monthly cash flow projection report c. Weekly cash requirements report Note: To ensure the accuracy of your reports, it is advised you rely on an experienced accountant or bookkeeper to prepare these reports for you to review.

• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

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• ii. Build Up Cash Reserves
• iii. Get a Line of Credit
• iv. Reduce Your Payment Costs
• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

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Assessing Your Payments: Current Scenario

The Boston Travel Biz: Collecting $2M Annually (USD)

• $1M in Credit Card Transactions

○ Merchant Fees (a percentage + fixed fee) ○ Payer Fees (FX rate markup ) ○ Typical Total Costs: $54,050

• $1M in Wire Transactions

○ Receiving Fees (a fixed fee) ○ Sending Fees (FX rate markup + fixed fee) ○ Typical Total Costs: $37,000

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Assessing Your Payments: Using Flywire

The Boston Travel Biz: Collecting $2M Annually (USD)

• $1M in Credit Card Transactions

○ LOWER Merchant Fees ○ EQUAL or LOWER Payer Fees ○ Typical Total Costs: $35,000

• $1M in Wire Transactions

○ LOWER Receiving Fees ○ LOWER Sending Fees ○ Typical Total Costs: $22,000

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Assessing Your Payments (sample)

The Boston Travel Biz: Collecting $2M Annually (USD)

Credit Card Fees

$54,050 $35,000

Wire Fees

$37,000 $22,000

Total Fees

$91,050 $57,000

Sample Savings $34,050

Request an assessment: flywire.com/assessment

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• v. Stagger Your Payment Schedule
• vi. Develop or Update Your Crisis and Risk

Management Plans

• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

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• vii. Purchase Business (Interruption) Insurance

That Includes Coverage For Risks Your Business Is The Most Prone To

• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

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• viii. Encourage Guests to Purchase

“Cancel for No Reason” Trip Insurance

• ix. Revise Your Terms and Conditions
• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

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• x. Build Relationships and Loyalty
• xi. Diversify Your Products, Markets, and

Income Sources

Diversify Your Trip Product Portfolio: Multiple destinations, and also domestic products Diversify Your Source Markets: Multiple independent source markets, & cultivate domestic market Diversify Business Lines: Digital products and services, local products and services, or tangible, crisis-proof goods

• 4. Beyond COVID-19: Building An Economically Resilient Adventure Operation

In Summation

• Recessions and downturns are cyclical, thus inevitable.
• Epidemics, pandemics, conflicts, war, civil unrest, banking crises, natural

disasters, man-made disasters, and other calamities have and will continue to influence business environments locally, regionally or globally.

• To prepare for the next inevitable uncertainty and economic downturn,

businesses must have a plan, exercise healthy financial practices, strive to minimize risk across their operations, and have firm economic safeguards in place to tolerate and overcome new crises.

• Rely on your advisors to select the appropriate course of action for your

enterprise.

• And if you are in an undesirable financial situation during a downturn, you must

conserve, borrow, and/or generate cash to get to other side of the financial hill. 42

The full report is available to download for free at adventuretravel.biz/research

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Q&A With The Panelists

Russell Walters

Adventure Travel Trade Association

Mike Massaro

CEO, Flywire

George Goodchild

Head of Integrations, Flywire

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