Proposed solutions for coronavirus-associated problems include introducing a global distribution system for language providers and agents similar to that of the wider travel industry, mandatory insurance policies, and reforming flexible payment plans.
“”That practice [of being able to pay six months later] has come back to haunt the schools”
Speaking at online events hosted by the Association of Language Travel Organisations, agents and language providers discussed how the pandemic has exposed faults which may threaten the viability of the language immersion industry.
The issue of refunds – which providers have previously described as “quite unsustainable” – is one that needs to be addressed urgently, stakeholders expressed.
“If your customers want a refund because they no longer want what you offer I think it is incumbent upon the school to make a decision to refund that,” Jose Antonio Flores, co-owner of Kings Education.
“But it is equally important for agents to understand that…the time that you send the booking, that is the same time you should send the payment,” he added.
Flexible payment plans may exacerbate cash flow issues for both agencies and schools, speakers agreed, while Flores suggested flexible payment plans that are “not necessarily operationally viable”.
“We need to take responsibility for that because that has gotten to a place where that has become selling points in some markets,” he continued.
“That practice [of being able to pay six months later] has come back to haunt the schools. This is a collective monster we have created.”
“This industry is set for a reset,” said co-owner, president & CEO of ILSC Education Group, Paul Schroeder.
While new products could be created for time slots that are traditionally less in demand at a lower price point he suggested, the industry should work towards a GDS system similar to that the travel industry has.
The system would help to mitigate issues around refunds and flexible payment plans.
“It’s not necessarily fair for a school to withhold refunds if students no longer want to make bookings, but “irresponsible” payment practices of some agents – sometimes delaying payments for months or years – has made operations more difficult, Flores added.
President and co-founder of Oxford International Education Group, David Brown, indicated he wanted larger chains to lead the way on better practice.
“Big, strong organisations have dominated the whole commission and payments cycle and structure, to the detriment of mid-size and small schools,” he suggested.
“One answer is for some of the bigger organisations in our industry to take the lead to correct the level of commissions and prices because that then will filter down to the other schools.”
Juan Manuel Elizalde of Kells College warned agencies and schools were “getting close to a divorce situation” over the issue of refunds and vouchers.
“When I was looking for schools [previously] I was looking for premier sales, teachers, numbers of students per class, for quality, commission and so forth,” he said.
“Now the first thing I will ask them is ‘give me your cancellation fees’.”
Ulises Ortega owner of Mexican agency Mundo Joven suggested that insurance should become more mandatory to ensure clients’ fees are protected.
“This industry is set for a reset”
“I think insurance today is a great option,” he said. “We do sell insurance that you can cancel for no reason and they refund 80%. Of course, the problem is that the culture of buying insurance was not that much in the mind of the student as it is now.”
Agents and schools should confirm that students are insured in case they want to cancel their trips, he said.
“[Insurance] would have a direct impact on the student to have the ability to make a quick decision about booking,” added Kings Education’s Flores.
“It would allow agents to have a bit of a safeguard in being able to justify making a decision early in the process. It will also give schools a little bit of flexibility to operate.”
Barbara Jaeschke of German agency GLS Sprachenzentrum estimated that agencies surviving the crisis will see increased bookings due to the guarantees they can offer students.
“If you book through an agency in your country you have your country’s law. If you book with a school [in another country] you have their law,” she said, explaining it is easier for customers to get refunds from agencies at home.
“Corona will even help agencies get more bookings because people realise they might get their money back in two weeks, while if you ask a school directly it might take six months,” Jaeschke added.