Why Pay for your Holidays in Advance?

By | Category: Travel rumblings

At the WTM Vision Conference in London yesterday (a conference where the travel industry peers into the future) one delegate raised a very interesting question. Why should travellers pay for their holidays in advance? After all with nearly everything you buy you pay and get it immediately. Or you pay afterwards. Think of all those advertisements for beds and furniture. Couldn’t holidays be treated in the same way?
In some countries it is quite common to pay later. Why not here?
Delegates were slightly taken aback by the suggestion but gave some pretty good reasons why it doesn’t happen here. The first, and probably the most important, is that the profit that a tour operator or travel agent makes on a holiday is low. About 2.7% one person said. They have to pay the suppliers involved for each part of the holiday but to be fair some tour operators wait 90-120 days before paying their bills so they will be receiving interest on the cash you deposit. Those that pay more often have to balance the cash flow and use your deposit and then full payment (6 weeks before the holiday starts usually) to help them. So from an economic point-of-view it seems unlikely that this will happen.
Another reason suggested was that by buying in advance we get good discounts from suppliers. Buy a train or airline fare in advance and you can get a much cheaper fare than closer to the date you travel. Buy a holiday in advance and you can get child discounts. Buy a cruise and you can get an upgrade. That would disappear, delegates said. By paying in advance, the consumer gets better deals.
So will it happen here after all that was said? I’m prepared to bet that it will. There will be some entrepreneur in the future who will try it. If they can make a success of it, it might become more widely adopted.

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