Today’s Panelists George Goodchild Russell Walters Mike Massaro Adventure Travel Trade Association CEO, Flywire Head of Integrations, Flywire 2
About ATTA 3
About ATTA ● 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/ 4
Delivering on life’s most important payments 550+ 12 240 150 $16B 2,000+ 99% World Money Offices Countries Clients Client FlyMates globally & territories currencies moved retention 5
Who we serve: 2,000+ clients, 99.9% Retention 6
Global Payment Network $7B moved across our network annually 7
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. 8
The full report is available to download for free at adventuretravel.biz/research 9
1. COVID-19: Current Global Outlook
1. COVID-19: Current Global Outlook “(Adventure) organizations are experiencing stark drops in business with consequences anticipated to last throughout the calendar year .” 84% 63% 68% 38% of organizations have decrease in demand increase in Estimated decrease a negative outlook for Q2 over 2019 Q2 cancellations for Q2 in business volume on business over 2019 Q2 over the next prospects over the calendar year next calendar year 11
1. COVID-19: Current Global Outlook “ 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. ” 12
2. The Long View: Economic Recovery Scenarios
2. The Long View: Economic Recovery Scenarios “ Given the current global outlook, a recession is inevitable . ” But what will the recovery look like? 14
2. The Long View: Economic Recovery Scenarios A V-shape or U-Shape Recession 15
2. The Long View: Economic Recovery Scenarios Additional Recession Paths: L-Shape or W-Shape 16
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. 17
3. Financial Strategies & Tactics for Businesses During a Downturn
3. Financial Strategies and Tactics for Businesses During a Downturn “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. 19
3. Financial Strategies and Tactics for Businesses During a Downturn But first , it is essential to understand your business’ current financial situation . 20
3. Financial Strategies and Tactics for Businesses During a Downturn 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. 21
3. Financial Strategies and Tactics for Businesses During a Downturn 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. 22
3. Financial Strategies and Tactics for Businesses During a Downturn Once you are armed with the information on 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. 23
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.” 24
3. Financial Strategies and Tactics for Businesses During a Downturn Conserve Cash i. Cut operating costs and expenses 1. Classify all your payables and expenses into the following quadrants: Expense Type Urgent (<90 days) Non-Urgent (90+ days) Critical expense 1 2 Non-critical expense 3 4 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) 25
3. Financial Strategies and Tactics for Businesses During a Downturn 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. 26
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.” 27
3. Financial Strategies and Tactics for Businesses During a Downturn 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 28
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.” 29
3. Financial Strategies and Tactics for Businesses During a Downturn 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 30
4. Beyond COVID-19: Building An Economically Resilient Adventure Operation
4. Beyond COVID-19: Building An Economically Resilient Adventure Operation “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 .” 32
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