travel tech insights

Collection challenges in the travel industry

So, let's explore together why we raised the issue of Collection in travel.

Let's consider the following figures:

Flight service:

  • Ticket cost: 560 EUR
  • Agency mark-up: 25 EUR
  • Cost of sales for the ticket: ~ 15 EUR
  • Profit before taxes: 10 EUR
  • If the customer needs to be credited for 2 months with an average interest rate of 2% it means an additional cost of sale of : 11.2 EUR

    This translates into the following calculation:

  • Ticket cost: 560 EUR
  • Agency mark-up: 25 EUR
  • Cost of sales for tickets: ~ 15 EUR
  • Additional cost of sales for crediting: ~11.2 EUR
  • Profit before taxes: -1.2 EUR (actually a loss)

*Note: This example is a simple theoretical one, just to exemplify the previous statement. Reality is more complex than that and it depends on multiple factors: economy, interest rate, sales channel, conversion rate, technology used etc.

Topics: collection collection challenges TINA