Two Lessons From Far&Wide

Something to be learned by the recent bankruptcy.

By: M.J. Smith

Some industry observers say they had expected Far&Wide’s recent bankruptcy. Maybe they did, but a lot of travelers and a lot of agents certainly didn’t.

Company executives probably were still in the courthouse when Bob Whitley, director of the U.S. Tour Operators Association, got his first call about some stranded tourists. Luckily, the Irish Tourist Board agreed to help. Others, however, haven’t been so fortunate.

Whitley said at the time that he didn’t know the extent of Far&Wide’s debt, but he doubted its $1 million bond would stretch to more than pennies on the dollar. And, he added, it would be months before anyone sees those pennies.

So what’s the big lesson here? Credit cards and service fees.

Encourage your clients to use credit cards. Think of the transaction fees as insurance premiums you don’t need the coverage often but it’s great to have it in an emergency.

The Far&Wide customers who paid by credit card could challenge the charges that very day and would have a settlement in a month or two. They may dislike the inconvenience, but at least they’re not losing their hard-earned vacation money and blaming you.

And service fees?

Well, when the bankruptcy court ranks creditors, commission payments are going to be way, way down on the list. That may not be a fundamental reason to use a service-for-fee operating structure, but you’ve got to agree that it’s a lot harder to get money from Chicago or New York or the U.S. Bankruptcy Court of Southern Florida than it is to get paid by the person sitting in your visitor’s chair.