Active currency management, a good savings opportunity

The tourism sector is probably the most sensitive to exchange rate fluctuations. The depreciation of a currency can wipe out a strategic market for an agency or tour operator, but it can also be a tool to optimize your business margin. It all depends on how it is managed.

During the worst years of the crisis, many tour operators lived off the Russian market, a high-end client with great purchasing power. In 2015 the depreciation of the ruble took it by storm. European agencies suffered drops of between 35% and 50% in the visits of this type of tourist. Many of them closed.

Good currency management, properly used, is the best tool to control the exchange rate risk and protect the company's margin, but it also allows to be more competitive. Information and control lead to better price adjustment. Currency management is important at both the strategic and operational levels.

This is the most significant example of how the volatility of the foreign exchange market can affect the tourism sector, but not the only one. Agencies are exposed every day to see their profits cut if the exchange rate goes against them. An obstacle that can be critical in cases where small margins are involved.

Companies in the sector that have realized this weakness have found the solution in the fintech industry, i.e., the one that combines financing with technology. They optimize their currency operations by means of automatic buy orders that are executed when the exchange rate reaches the most convenient level. In this way, they have all their currency risk managed efficiently. Technology makes it possible; fintechs offer it.

More and more companies are turning to technology applied to finance. A technology that allows them to centralize all their operations through simple and efficient platforms, and with the personalized support of exchange management specialists who help them to establish the most convenient strategy.