Hani Khorsheed, secretary general of the Abu Dhabi Travel and Tourism Agencies Council (ATTAC), which represents around 300 travel agencies in Abu Dhabi has warned travel agents against the "bad habit" of offering extended credit facilities to customers.
“This is the culture in the Gulf in general - that you have it now and you pay later,” he said. “People don’t believe that if they are issued a ticket of AED30,000 that they have to pay. They don’t like to put their hands in their pocket or give a credit card and pay upfront. It is a bad habit.”
Khorsheed admitted that while offering extended credit facilities was the travel agents “biggest marketing tool”; it had resulted in agents pre-financing their customers travel for months at a time; and agents were suffering from having to shoulder the financial burden of late-paying clients.
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“Offering companies credit is a marketing tool for us – if I give your company a credit facility for 30 days or 40 days, you don’t book your travel online, you come to me,” said Khorsheed.
“But it’s backfiring on us because the agents still have to pay IATA every 15 days while the customer doesn’t pay till 30 days, 45 days or even longer.”
He added: “What is aggravating the issue is the length of the credit period. In other parts of the world, corporates pay the travel agent on a monthly basis – if the payment is delayed there is a penalty or a fee – but here it doesn’t exist. We tell the corporates that if you delay payment you get a fine or a penalty of 1% of the volume, to cover the cost.
But it’s not working.”
ATTAC is now trying to ease the financial burden placed on its members by regulating credit lines offered to customers, instigating penalties for late payment; as well as negotiating lower fees for agencies with the banks.
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Feb 8, 2011 , India
Unless travel agents in general and corporate travel agents in particular understand they are not financers,but providing a service and should be paid for it in time,travel agencies will continue to default their obligation to IATA and airlines,reflecting badly on industry on the whole. On one ha...
Feb 7, 2011 , United Arab Emirates
I want to congratulate ATTAC for its efforts, 'Good service does not mean lying down like a carpet and making the corporates walk all over us, we are here doing travel business not banking. Money has a cost attached to it and extended credit facilities eat into our non-existent profit margins....