How investing in foreign exchange planning is helping to boost this travel agent’s bottom line

Michael Cohen 

A dream skiing holiday to Japan is now more affordable for Australians thanks to a strong Aussie dollar!

With new data revealing travel agent transaction volumes are exceeding pre-COVID levels, travel retailers are ramping up operations to meet soaring pent-up demand. However, as inflationary pressures force customers to reassess travel plans and budgets, travel agents are scouring the market for the best deals to stretch the value of their customers’ dollar.

Throughout his 25 years in the industry, Blue Powder Travel Director Michael Cohen has come to understand the importance of foreign exchange (FX) rates in securing the best value for customers when they book with his international ski and snowboard travel agency.

Though often overlooked when doing business globally, the fluctuation of currency markets combined with an unpredictable Australian dollar (AUD) wavering between US$0.62 and US$0.70 can negatively impact the cost of travel and ultimately, customers’ wallets. Recently, this has had a flow-on effect for travel businesses’ bottom lines.

Since investing in OFX’s services, Michael estimates he will turnover between $3-4m over the coming 12 months. By deploying risk management tools - such as Forward Exchange Contracts - to temper an unstable AUD, Michael has been able to sidestep higher fees from banks and minimise the need to pass on costs to his clientele.

As overseas winter ski seasons pick up, Michael strongly recommends other Australian travel businesses keep across developments in the AUD. He warned its volatility, even in the space of a few weeks, could potentially wipe thousands of dollars off a business’s profit margins should this go unmonitored.

With the AUD projected to continue to descend further into risky territory in light of geopolitical and economic developments, engaging in consistent FX planning will be crucial for many businesses. Utilising tools, including the aforementioned Forward Exchange Contracts or Limit Orders, can be an effective way for businesses to insulate themselves from FX market movements, whilst encouraging repeat customers.