Travel came to a near-standstill at the start of the COVID-19 pandemic in early 2020. While domestic travel recovered fairly quickly, tour operators and travel professionals booking international trips endured a longer period of diminished activity. As 2022 opened, so did the international travel industry, albeit slowly and cautiously. International travel rose over the summer of 2022 as more destinations opened, and people were again able to satisfy their wanderlust.
In August of 2022, with the support of NTA, Corpay Cross-Border Solutions surveyed NTA members to gauge sentiment about business as COVID ebbed and their expectations for the future health of the international travel sector. After such challenging times, we were pleased to see an overall optimistic tone. Our survey comprised 12 questions grouped into four categories: tenure in tour operation and packaging, the scope of members’ international business, thoughts about returning to “normal” after three years of COVID restrictions, and their global payment needs and how they manage their foreign currency exchange.
Respondents
More than 80% of members surveyed have been in the profession for 11 years or more. Nearly 73% have 20 years or more of such professional experience.
Scope of business
We wanted to gain a sense of the volume of international tours that members expect to offer over the coming 12 to 18 months and the number of continents they typically deal with when planning trips.
While almost 44% expect to plan fewer than 10 international departures, more than 45% plan to offer between 11 and 100 trips. Just over 6% expect to offer more than 500, and the balance (4.5%) plan to offer between 101 and 199 trips.
Nearly half offer tours to two or three continents, with an additional 20% offering tours to four or five.
COVID long-term impact
Next, we wanted to get a sense of how respondents felt about the long-term impact of COVID on international travel.
Confidence that restrictions would be relaxed
We asked how confident respondents were that there would be a near total relaxation on travel restrictions within the next five years. A full 47% were very confident about the future, with one-third (33.3%) somewhat more cautious. It was overall a positive showing: Only 1.5% chose “pessimistic.”
Top considerations in adding new destinations
Next, we wondered how heavily COVID restrictions would weigh on members’ considerations in adding new international destinations in 2023. For nearly 40%, the top consideration would be industry trends, while only 29% cited the relaxation of COVID restrictions. Over 23.1% cited “other.”
Attractive foreign exchanges rates were low on the list of considerations, perhaps because many travelers don’t often factor in currency conversion when choosing where they would like to go!
Foreign exchange (FX) needs
More often than not, international travel necessitates a currency exchange. The next group of questions focuses on how tour operators manage that, and how it might affect their decision-making.
Number of currencies
More than three-quarters (75.8%) of members deal with fewer than five currencies (besides their own local currency).
Acceptance of currencies other than the U.S. dollar or euro
The US dollar (USD) and euro (EUR) are widely accepted. For nearly 60% of our respondents, fewer than 25% of their overseas destination partners require a currency which is neither the U.S. dollar nor the euro. A further 20% report that 25 to 50% of their destinations prefer currencies other than USD or EUR.
Managing payments in local currencies
We then asked how tour operators typically manage currency fluctuations when making local currency payments to tour packagers and other destination partners. More than 40% pay at the prevailing exchange rate at the time of the purchase or the SPOT rate (A in the chart below); while nearly 14% buy a forward contract to lock the price for each tour (B in the chart below). Only 9% bulk-buy forwards at a budgeted rate (C in the chart below) and draw these down over an extended period.
More than one-third (35%) of respondents use a blended approach, either with a combination of spot payments and forward contracts for individual tours or a combination of spot payments and drawdowns of bulk purchases.
Comfort with foreign exchange management
We also wanted to gauge how members manage foreign exchange payments and processes and how closely they watch currency movements.
Processing international payments
We asked how members typically process payments to overseas vendors. Just over 70% use their bank or a non-bank FX specialist, while over 28% use a credit card or PayPal. Less than 2% use a solution embedded in an ERP or accounts payable platform.
Impact of currency market movement
We next asked how much attention tour operators typically pay to currency market movements as well as the economic and political impacts on the markets. Nearly 20% of respondents have a dedicated finance team or treasurer to manage their foreign exchange needs; the same percentage simply focuses on selling tours.
Just over one-third of respondents (35.4%) take a general interest, while the remainder (27.7%) work with an external resource, like their bank or FX provider.
Using their accounting platform
We wondered how comfortable respondents felt in setting up new payees who accept unfamiliar currencies in their accounting systems. Nearly 71% felt “very comfortable” or “somewhat comfortable.” Nearly 30% felt “hesitant” or “very uncomfortable.”
How customers weigh foreign exchange into their travel planning
Our last question centered on how much customers may consider the currency when choosing a new destination. Foreign exchange is a necessary part of international travel, but many tour operators claim that it doesn’t seem to unduly influence travelers’ destination selections.
More than half of the survey respondents felt customers didn’t consider it that much, while only 6.2% felt their customers considered it “a lot.” Nearly 37% of members said customers considered it “somewhat.”
Conclusions
As more and more people regain confidence about international travel, 2023 promises to be even more active than 2022, and international travel is expected to grow even more in 2024. Many members are in the process of finalizing tours for the balance of 2023 and are actively planning for 2024 and beyond.
This survey reflects members’ attitudes at a specific point in time. As noted above, respondents conveyed a tone of optimism.
We plan to make this survey an annual event; the next survey is planned for August 2023. We plan to share results around the time of Travel Exchange in November.
In the meantime, we would like to hear your thoughts. What do you see on the horizon in overseas travel? What destinations or experiences are your clients asking for? Please use the contact information below to respond.
About Corpay Cross-Border Solutions
As the world’s largest non-bank global payments and currency risk management provider, Corpay offers more than 145 currencies, including many exotic currencies. With an extensive global banking infrastructure, award winning payments technologies, and support from a dedicated account manager, Corpay helps reduce the complexity of foreign exchange markets and helps clients manage currency risk.
Corpay Cross-Border Solutions is proud to be an Associate Member and foreign exchange partner of NTA.
Corpay’s team of FX experts can be a resource for NTA members who would like to learn more about foreign exchange and may be exploring new destinations to delight their clients.
Andrew Howlett
About the author
Andrew Howlett is director of strategic partnerships at Corpay Cross-Border Solutions. He has over 15 years’ experience in the global payment space, working with clients across North America and Europe to help manage their global payments and mitigate foreign exchange risk.
If you’re interested in learning more about Corpay, contact Howlett.
“Corpay” is a brand name used by the following corporate payment Fleetcor companies in multiple jurisdictions: “AFEX” is the trademark for services provided by subsidiaries of Associated Foreign Exchange, Inc. in various countries. “Cambridge Global Payments” is a trade name used by Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.) & subsidiares, Cambridge Mercantile Corp. (UK) Limited, and Cambridge Mercantile (Australia) Pty. Ltd. “Comdata Corporate Payments” a division of Comdata, Inc. that provides B2B payment card programs and technologies, “Nvoicepay, Inc.” provides accounts payable software and services. Cambridge Mercantile (Australia) Pty. Ltd. operates under ABN # 85 126 642 448 and AFSL # 351278. Re Cambridge Mercantile Corp. (UK) Limited: 1) its registered office is at 71 Fenchurch Street, 10th Floor, London, EC3M 4BS; 2) its England/Wales Company # is 05271222; 3) it is authorised by the Financial Conduct Authority (FRN 900702) under the Electronic Money Regulations 2011 for the provision of electronic money and payment services, and 4) it is registered (#ZA031019) with the Information Commissioner’s Office. Services in the UK are provided by Associated Foreign Exchange Limited (which does business under the trade name of AFEX) or AFEX Markets Plc (collectively referred to as ‘AFEX’). Associated Foreign Exchange Ltd (registered in England and Wales, Company Number 4848033, Registered Office Address: 4th Floor, 40 Strand, London WC2N 5RW) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017 (Register Reference: 502593) for the provision of payment services and is registered as an MSB with HM Revenue & Customs (Registered No: 12159000). AFEX Markets Plc is authorised and regulated by the Financial Conduct Authority as an investment firm (firm reference number is 526034). Registered in England and Wales. Registered Office: 4th Floor, 40 Strand, London, WC2N 5RW (registered no. 07061516). Foreign exchange options and other derivative products are not suitable for everyone and you should ensure you fully understand the risks involved before purchasing these products. Please visit www.fleetcor.com for more details and more information on our legal, regulatory and privacy statements and terms of use. The foregoing information is provided as information on Corpay and does not provide any promise, warranty, covenants, agreements or guaranty. The information is confidential and cannot be shared without our permission. The information is of a general nature and does not take into account your financial objectives, financial situation or needs, and you will need to decide yourself whether our products are appropriate for you.
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