Convention special: Banks wary of travel industry
Banks are wary about lending to travel companies because of the exposure they face when something goes wrong, a breakout session heard.
Speaking at the ‘Money Matters’ discussion group, Tony Mooney, the business development director, for Bank of Scotland Merchant Services, highlighted the problem of ‘charge backs’, when people claim against their credit card when a company fails.
Those booking with visa debit cards – around 85 per cent of all those who use a debit card to pay for holidays – can also claim refunds from their card issuer.
“The problem is the exposure because banks are at risk with charge backs and have to make a refund,” said Mooney.
“The lead times can be very long – around 150 days from when a booking is made to the time it is fulfilled – and the bank will be exposed for that period.”
Despite this, Mooney argued that it was a good thing that banks took on that risk.
Chris Lee, relationship director for Barclays Corporate, said better education was needed so that bankers understood the industry.
“You need to have a proper relationship with your manager at your bank so that he understands that not all companies are the same. They need to understand that you can’t roll Goldtrail into the same bracket as Kuoni and Trailfinders,” he said.
Lee said that some business owners who were aiming to sell their businesses had an unrealistic view of the value of their firm. They often looked at what they wanted to do with the money from a sale rather than putting a realistic value on the company.
By Jeremy Skidmore
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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