With rumours swirling that an India-based tour operator is next on the chopping block following the shock demise of travel giant, Thomas Cook, Southern African tourism suppliers are taking the opportunity to re-look their risk mitigation strategies.

Southern Africa Tourism Services Association (Satsa) CEO, David Frost, told Tourism Update that the impact of the Thomas Cook demise was thankfully limited to a few destination management companies as South Africa was not a core destination for the company.

“In the case of India’s Cox & Kings, suppliers to the tour operator have been aware of potential vulnerabilities and are protecting their business accordingly,” he added.

Chief Operating Officer of Satsa, Hannelie du Toit, said in a recent newsflash to association members that some red flags that a travel company might be in trouble include changing the terms of agreement, unanswered correspondence, or consistently late payments on invoices and/or changing banks or acquiring new financing.

She pointed out that in all cases, close communication with the debtor in question was essential. “If your customer is operating in good faith, they will respond to all your concerns to safeguard the relationship. Their unwillingness to continue communication should be a stark warning and you should take the necessary measures to mitigate your risk,” highlighted Du Toit.

Reputation management specialist, Regine le Roux, agreed, highlighting that it was “incredibly important”  for industry members to keep tabs on what is happening in their business as well as in the industry.

“Conducting regular research will help you understand what is positively impacting the company and your travel partners and will also help you to identify gaps and risk areas – which are crucial to the sustainability of any organisation,” she said.

Le Roux added that preparing for a crisis was pivotal to limiting reputational damage as a supplier to a collapsing operator. “A crisis communication policy needs to be non-negotiable. It is so important to let internal stakeholders know first, and then have a strategy in place to let all other external stakeholders know what is going on and addressing all the key questions.”

Frost said, should suppliers be a member of an association or a group, they should raise their suspicions with their industry representative. “The association/head office will investigate concerns directly with the supplier and put a remediation plan in place if required.”

He emphasised the importance of establishing a monitoring protocol. “Don’t wait for a supplier default to have a proper plan in place. Be proactive and ensure that you have a vigorous monitoring system and process, including vetting and monitoring suppliers,” said Frost.

Other key ways to mitigate risk include establishing a preferred-supplier policy and to encourage customers to obtain travel insurance and ensure they are aware of the terms of their insurance and what type of supplier default is covered.