The Australian dollar climbing back above $.75 is an unexpected boon for the Australian traveller and therefore the Australian travel agent. Clothing in the US is now 10 percent cheaper.
It won’t last forever so now is the time for agents to cash in and lock in some great rates for their customers.
Here are five considerations on how to cash in on an unexpectedly strong Aussie dollar:
Why is it good for travel?
Nearly everything we book in Australia goes through a number of different currencies. For example roomsXML buys and sells in five separate currencies. Put simply, some accommodation could well be 10 percent cheaper than what we had two months ago. That makes agents more competitive and it flows onto everything beyond hotels.
Selling now is a good move.
Oil is also cheap
This is another cracker for the agent. Two taxi drivers told me this week about how trips back home were the cheapest they can ever remember. The price of oil was being amplified by an Australian dollar which can buy more. So not only can we buy hotels cheaper but airline travel is very cheap, spending money will go further. It’s one of the reasons why Qantas and Ryanair expect to yield hundreds of millions of dollars more in profit this year.
But will it last?
Not meaning to be all Doomsday but it cannot last. A rising Aussie dollar means exports out of Australia start to get more expensive and the Reserve Bank responds by dropping interest rates and in response, the world will devalue the Australian dollar. The dialogue in banking circles has already begun.
Too many brainy people suggest the Aussie dollar’s natural place in the world is around 65 to 70 US cents per dollar. So at the moment it’s about 10 percent higher than what most think it’s worth.
But what if it drops?
This is the danger if you aren’t protected against. We just need a few sensationalist headlines, some different data out of China, the Reserve Bank dropping the interest rates and suddenly the Aussie dollar loses five cents over the course of the month. If you have bought at a great exchange rate but not locked in those rates, your profit margins are at risk .
You’ve either got to absorb a loss or ask your customer for more money. Personally, if I was buying something from one of you guys and you contacted me a week later and said “sorry, that just went up by 5 percent” no matter what the logic was, I would think twice about dealing with you in the future.
You have to lock in your rates. You cannot build a business buying on variable rates. End of story.
Start marketing now
Share these messages with your customers. Now is a very good time to advertise heavily on the facts that prices are going to be strong for a short time and travellers should be cashing with you now.
Be direct, be bold. It’s okay for Webjet and Ryanair to get on the front foot so what is stopping you? Fortune favours the brave.
