The fact that companies in the travel industry are more prone to bankruptcy due to unpredictable economic conditions has caused banks to become increasingly hesitant to offer them merchant accounts.
Considering over 40 airlines went bankrupt in 2020 alone, it’s understandable why banks are cautious when it comes to doing business with airlines. Unfortunately for airlines, this fear can result in higher fees.
However, this increased risk of bankruptcy is not limited to airlines. Travel companies can go bankrupt due to many reasons.
For example, suppose there is an economic downturn or a global health crisis that causes people to reduce their spending on travel and holidays.
In that case, it can have a huge impact on a company’s revenue. Poor management, faulty decision-making, and the lack of proper financial planning can also lead to bankruptcy.
Running a travel company is complex and requires management to operate carefully to remain successful.