Let’s face it: Running a travel agency is a risky business.
What? Did I just say that? You bet I did! Let me explain.
Every business with inherent unknowns also has inherent
risks. Hence, it’s safe to say that every business has risks. But what about
travel—a company devoted to making dreams of fun, relaxation, romance, and
adventure come true? As procurers of such sought-after experiences as these,
some travel advisors might flinch at the thought of risk—other than those about
the weather. However—and flinch as they may—travel advisors must get honest about
addressing potential risks to their business that can be as simple as travel
disruptions and as complex as legal regulation compliance. They must educate
themselves about their liabilities and ensure that they fully understand the
dangers of being complacent and in the dark about their business risk.
Because I like to keep things as simple as possible, I
developed a framework for assessing and managing risks. The REAL
framework—Responsibility, Effectiveness, Authority, and Legality—is a
comprehensive approach to understanding and confronting risks that might
threaten you and your travel agency. This article will explain how the
framework’s components interrelate and provide practical examples and
strategies to enhance your risk-management practices.
Components of the REAL Framework
- Responsibility: Understanding and meeting your obligations to clients and suppliers is
essential to your success in the travel industry. Staying informed about
and accessing the right resources, consistently communicating with
transparency and purpose, and being attentive, proactive, and strategic in
all operations, interactions, and relationships will set the standard for
competent risk management in your agency.
- Effectiveness: It’s a fact: Disruptions in the travel industry are unavoidable. The
critical question is, "How adept are you at handling travel
disruptions?” Your answer depends on how much you have prioritized
effectiveness throughout your operations. And ensuing effectiveness is one
of the best ways you can mitigate the risks associated with travel.
- Authority: Your authority begins with your deep understanding of the travel industry
and client needs and your role in effectively bringing the two together.
It requires curiosity, determination, and a commitment to excellence, and
results in a reputation of satisfactory performance, deep knowledge, and proficiency
in advising clients. Authority also includes understanding your
decision-making limits and proactively working within established
boundaries to leverage supplier relationships. This empowers you to advocate
for better outcomes on behalf of your clients.
- Legality: As is true of those at the top of businesses in all industries, the buck
stops with you when it comes to travel laws and regulations. Are you and
your agency compliant with industry regulations, and do you continually
update your contracts to ensure that your business and clients are well
protected? Also, do your clients clearly understand their responsibilities
and legal obligations when working with you? Addressing and mitigating
legal risks is a non-negotiable component of competent travel-business
leadership.
Common Risks and How to Manage Them
Below, we’ll explore risks in each area of the REAL
framework and provide strategies to manage them effectively.
1. Responsibility: Do your homework to provide competent communication
and guidance.
Without in-depth knowledge and superb communication skills,
you cannot fulfill your role as a travel advisor. Clearly, it is your responsibility
to know both your travel and clients before you provide value-based service. When
your onboarding process is designed to help ensure you really know and
understand your clients, and they know and understand you and what you provide,
you are well on your way to managing risk. Likewise, sound risk management
ensures that you stay up to date about your suppliers so that you can tap into resources
appropriate for your clients and help those clients have accurate expectations.
Perhaps you’ve never thought about unrealistic client expectations as a risk.
Think again. And that’s only one of the many risks you can thwart from the
get-go with proactive planning and communication.
Please don’t misunderstand. It’s not about you being perfect
and having all the answers. Instead, it's about making what you know available
to your clients and ensuring they know where to find other critical
information. Advisors should ensure that clients understand how to access
essential and (often) changing travel details such as entry requirements, visa
needs, and legal obligations for their destination.
For example, if new visa regulations are introduced, advise
your clients to check the relevant embassy or government website for updates. To
uncover potential issues and reveal travel disruptions, ask your clients basic
questions such as, "Have you checked to ensure your passport is valid for
your trip’s duration?" By asking the right questions and directing clients
to credible resources such as Travel.gov,
you will empower them to stay informed and prepared for their journey. This
approach not only minimizes the risks and fulfills your advisory responsibility,
but it also builds trust by demonstrating a commitment to your clients' travel
experiences.
2. Effectiveness: Optimize business operations.
When I conduct seminars, this is the point at which I
constantly challenge travel advisors to think like a CEO and attend to the
business of the business. Again, being purposeful, proactive, and strategic are
hallmarks of establishing effective business operations and risk-management
systems. Business effectiveness means that operations are efficient, working as
planned, and can handle sudden changes. Having contingency plans in place and possessing
the ability to guide clients will help your agency maintain consistent service.
In the travel industry, effectiveness means having in place
automated systems for payment reminders, itinerary changes, and emergency
contacts to ensure that communication continues smoothly. It includes
reasonable use of technology to streamline processes for ease of use prior to
the trip and self-service during travel. Effectiveness must be systematically built
into technology to guide customers to the information they need, such as travel
documents and additional resources, especially when disruptions occur.
For example, if a flight is canceled due to weather,
advisors with effective operations and solid contingency plans can quickly
provide rebooking options and share resources for real-time updates.
3. Authority: Earn and maintain a reputation built on
knowledge, trust, and integrity.
There’s no substitute for a commitment to doing the right
thing and having high standards of performance. The reputation you build within
the industry is critical to your success in securing and sustaining ideal
clients and ensuring your suppliers maintain the same high standards. And yet,
you cannot control everybody and everything throughout the process of bringing
a travel experience to fruition.
Although establishing strong, trustworthy relationships with
suppliers is essential; it also is critical that you understand where your
responsibilities end, and theirs begin. Acknowledging the limits of your
authority allows you to effectively and respectfully navigate supplier relationships
without overstepping your bounds. By respecting the policies of suppliers when
advising and guiding your clients, you can successfully advocate for favorable
outcomes.
For example, when clients need to adjust a booking, you
should guide them through the established processes and policies of all
entities concerned. This sets the right expectations and helps you stay within
your role while serving as the client advocate. Additionally, ensuring you have
established trusted relationships with suppliers provides flexibility and positions
you to secure special considerations when necessary.
4. Legality: Establish a strong system for managing and
mitigating legal risks.
Few aspects of business management can take a travel
operation to its knees as quickly and devastatingly as the repercussions of
ignoring legal liabilities. You must take a hard look at the legal side of
being a competent and proactive travel advisor.
Travel advisors must put safeguards in place to help
mitigate legal risks. These are internal controls and include such actions as staying
informed about and adhering to industry regulations, establishing and
operationalizing up-to-date legal contracts, outlining the roles and
responsibilities of all parties, and incorporating essential legal disclosures.
Safeguarding your agency also includes ensuring strict compliance with specific
regulations, such as Seller of Travel (SOT) laws to residents of states like
California, Florida, Washington, and Hawaii.
Another tactic for mitigating legal risks is regularly
reviewing and updating contracts. This will ensure terms are clear in regard to
cancellations, service changes, liability limitations, and other relevant
conditions. Terms and Conditions should include legal disclosures that clarify
the limitations of your agency’s responsibility, especially when dealing with
third-party suppliers or outlining other travel-associated risks. Because these
terms are designed to eliminate confusion and help establish realistic client expectations,
they reduce the potential for costly and reputation-damaging legal disputes.
Quick Wins to Improve Your Risk Management Today
1. Develop
a plan for client education.
As a
part of your onboarding process, guide your clients to official sources of
information on travel requirements and legal obligations.
2. Update
contracts to reflect emerging risks.
Ensure
all documented terms are current and legally sound and include specific
clauses addressing unforeseen events.
3. Automate
processes to streamline operations.
Use
tools that send reminders, updates, and alerts while guiding clients on
how and where to find the information they need.
4. Reveal
potential issues by asking questions.
Questions
about passports or visas can reveal gaps in your clients’ preparedness and
allow you to direct them to the right resources.
By taking a deep dive into responsibility, effectiveness,
authority, and legality and adopting the strategies provided in my framework,
travel advisors can better manage risks for long-term sustainability and
success.
After all (in my way of thinking), this is the REAL reason
for sound risk management in the first place!
ABOUT THE AUTHOR
After achieving notable success as a multi-million-dollar travel
advisor and agency owner, Sheila Folk founded Travel Industry Solutions to
provide travel professionals with innovative and comprehensive legal protection
and operations tools. Backed by over 20 years of experience in technology,
product development, and hospitality management, Sheila is a sought-after
speaker on customer attraction and retention, innovative practices, and
business process optimization.
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