The 4 financial mistakes that sink travel SMEs
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If you run a travel agency, a boutique hotel or a travel-tech startup, you know margins are tight. According to Alexis Montenegro's analysis on Noray, four mistakes keep haunting small tourism businesses and end up killing them.
The worst one: lack of cash flow control. Many owners look at their bank balance and think everything is fine, but cash flow is oxygen. Without a weekly forecast of income and payments, any hiccup (a wave of cancellations, a delayed OTAOTAAn online travel agency is a channel that sells accommodation and travel online in exchange for a commission. Booking.com and Expedia are the biggest. They bring volume and visibility, but charge commissions that eat... payout) leaves you gasping.
Then there's the personal-business money mix. I cringe when I see small agency owners paying dinner with the company card. That hides losses and stops you from knowing if the business is actually profitable. Third mistake: not calculating the real gross margin per product or service. A big tour package sale can look great, but if you don't strip out intermediary commissionsCommissionCommission is the percentage a channel keeps for each booking it brings the hotel. It is the cost of selling through an OTA and usually runs from 15 to 25 percent, more in niche channels. Cutting dependence on high co... and hidden costs, you're in for a shock.
And the fourth, which seems obvious: not provisioning for taxes. When VAT or income tax is due, the money is already spent. My take: automate cash alerts, use accounting tools linked to your PMSPMSThe property management system is a hotel's core software. It handles reservations, check-in and check-out, room assignment, billing and the status of every stay. It is the operational heart that most other tools plug... or booking system, and review margin by channel at least once a month. As the piece Errores financieros frecuentes en las pymes y cómo evitarlos a tiempo puts it, catching them early is a survival issue. No way around it.
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One sharp travel-industry brief a day. Free.