Travel Weekly, 20 April 2007
Travel Weekly, Issue 45, April 20, 2007
By Melissa Hadley
AUD rally a gift to online players
Wholesalers are at risk of losing significant business to undercutting Internet suppliers, with the Australian dollar now trading at a 17-year-high, according to a currency risk management firm.
A more "fluid" pricing structure will allow online operators to drop their prices to match the stronger dollar and attract more consumers, leaving wholesalers in their wake, HiFX's senior consultant for treasury risk management, Tom Averill said.
Averill warned wholesalers who hedged their prices up to 12 months ago, when the currency was worth around 75 US cents, could be at risk of losing significant business to online suppliers if they do not adjust prices to accomodate the stronger dollar.
"When you see such a big move in the Australian dollar, it does the online competitors an advantage because they're more nimble, their pricing is more fluid and they can adjust for these sorts of pricing factors." he said.
"Wholesalers are not going to reprint a brochure because of an appreciation in the dollar."
The Australian dollar is at a 17-year-high and has risen more than 12 percent in less than six months to be currently hoevering around 83 US cents.
But, Council of Australian Tour Operators chairman, Simon Hills said smart wholesalers will be able to adjust their prices and will rely on agents to double check before completing bookings.
"most agents now ring to request pricing anyway, unless they are purchasng online."
Hills added, while the brochure is always "in theory" correct at the time of printing, not all agents rely on the price in brochures, instead using them as a guide.
Hills said in contrast to Averill's concerns for traditional wholesalers, the surging Australian dollar will drive more business to outbound operators, and if wholesalers stick to their original pricing structures, they will be able to further increase profits this year.
"I expect that most outbound wholesalers would be holding at the rates that they set some time ago to maximise their profits," Hills said.