As a travel wholesale business selling tours of Russia, the tragedy of MH17 could have brought Beyond Travel to its knees had the company not diversified its offering, its owner says.
Speaking with My Business, the owner and CEO of the Perth-based business, Michael Lavilles, admitted that a diversified product offering saved the business from the fallout associated with the sudden and unforeseeable disaster when the Malaysian Airlines passenger jet was shot down over Ukraine.
“A lot of our sales were, in the past, Russia-related … but we diversified much earlier on – we went into Greece and Turkey and also into Croatia, and just recently we went into Scandinavia. Now Russia only comprises about 18 per cent of our sales,” Mr Lavilles said.
“We did see a dip in Russia at that time, and we understood that, and it did affect us, but not as greatly as it would have in the past.”
However, since taking over full ownership of the travel wholesale business in December 2015, Mr Lavilles has focused on further diversifying Beyond Travel’s offering without denting its niche appeal. As well as buffering against unforeseen global or industry-wide shocks, another significant reason for this push was to shore up cash flow.
“Capital is very key, especially for our industry, because we operate on very narrow margins, so our retained earnings is basically what we use to grow, and that is very small,” he explained.
“[And] because we are seasonal, and we’re a northern hemisphere-tied company, it depends on the summer of the northern hemisphere. So during November to February we’re very quiet; no one wants to travel there, so our cash dips around that time.
“What we are developing now is the region which is India and Sri Lanka – that will absorb shocks in the northern hemisphere. It is also opposite in seasonality to Europe, so that will fix our negative cash flow during the season that we are lean. We are putting things together to absorb the shocks.”
Another means of maintaining the company’s core focus on Russia, Eastern Europe and Central Asia is to expand its sales base beyond Australia and New Zealand.
“The type of regions we sell, they are destinations that are not easy to get to – you wouldn’t particularly want to book Central Asia online, or Russia. There is a lot of expertise that you need. I’m sure you can research that yourself on the web, but the actual trust of booking a hotel itself in Russia directly is going to be a bit of a tricky situation,” said Mr Lavilles.
“Now that we are going online, we have the ability to do that overseas. Because of our type of products – we do only English-speaking tours – we are limited still to the English-speaking countries, like the US, Canada, the UK and New Zealand/Australia, so I think that is our immediate [focus] where we can sell that straight away. Online has enabled us to do that.”
He added: “I’m not the type of person to bury my head in the sand ... there is a lot of development in the online realm”.