Is joint bank guarantee viable?

Travel agents have floated the idea of a joint bank guarantee, taken by travel associations, for an extended credit line in the hospitality sector. Is the proposition a win-win for agents and hoteliers alike?

Pradip Lulla, Acting President and Vice President, TAFI

All travel agents don’t have volumes in the hotel business. For group purchases, hotels require deposits or a bank guarantee in lieu of a deposit in order to cover cancellations. We have approached certain hotel chains for joint bank guarantee, which would enable our members to cover cancellations at a lower margin and have better cash flow, but such an agreement is yet to fructify.

Gurbaxish Singh Kohli, Vice President, FHRAI

Keeping in mind how the industry is being affected by OTAs, the traditional travel agent and hotel partnership would be an interesting option to explore. Based on the above, the range would be around five per cent for individual bookings and up to 15 per cent for larger ones. We would be open to consider a joint bank guarantee, but it would require a prior and complete scrutiny of the terms and conditions.

Jyoti Mayal, Honorary Secretary General, TAAI

We support our members who have come out with a scheme for a joint bank guarantee for non-air products covering hospitality. Becoming a part of the joint bank guarantee with an association will enable them to do business with a pool of suppliers, which the association would get together to deliver volume. I believe, this is a good initiative and will support the cause of smaller agents.

Rishi Puri, SVP, Operations & Development, Lords Hotels

With the best of travel trade partners, there are times when one erring member could spoil the name of an entire fraternity. Though it surely is a Herculean task, a joint bank guarantee could be the way forward. It will ensure that while the travel agent continues to enjoy seamless credit, the hotelier is also relaxed with the extended credit and assured that his money is safe.

Sunil Ghadiok, Director, Shanti Hospitality Management Services

Any move that enhances ease of doing business is always welcome and I am sure that hotels, in general, would consider it with seriousness. There would need to be a clear understanding of the content of the bank guarantee with no scope of any ambiguity in respect of deliverables. Contracts would have to be reviewed and possibly revised to incorporate essentials of the guarantee.

Davinder Juj, General Manager, Eros Hotel New Delhi Nehru Place

Every project that starts with the good intent of increasing business is al- ways a viable option. Some important requirements before implementing the joint bank guarantee will be to understand the nature of liability among the guarantors; how money is going to be paid back; and in case there’s any default, how the hotel’s interests will be safeguarded and who will pay the money.