Tellme Club went bankrupt with 15.1 billion yen in debt when about 3,000 customers travel overseas

Tellme Club, a Japanese travel agency, filed for bankruptcy with Tokyo District Court on March 27 2017. This is the largest travel agency’s bankruptcy in Japan after the Lehman Brothers bankruptcy in 2008. Liabilities are estimated at 15.1 billion yen, including 9.9 billion yen on about 36,000 contracts with customers, 1.8 billion yen on 96 local hotels or land operators, 3.2 billion yen on loans from banks and 0.4 billion yen on International Air Transport Association (IATA).

Customers who have already paid to Tellme Club are estimated at 80,000 to 90,000, out of whom 3,000 were in traveling overseas, like Hawaii, South Korea or Taiwan (as of March 23). Tellme Club has requested those before departures to stop their travels to avoid possible local troubles.

Tellme Club joins the bankruptcy fund of Japan Association of Travel Agents (JATA), however it just covers about 120 million yen in total.

Tellme Clun was established in 1998 as a travel agency dealing with discounted travel tours and air tickets by purchasing air seats or hotel rooms at low costs in the off-season. The business environment around the travel industry, however, has been changing, like downsizing of aircraft, reduction of air seats on outbound flights from Japan due to a rapid increase in inbound travelers to Japan or growth of OTA in hotel booking.

The company shifted its business model to ads in newspapers, primarily targeting senior travelers, a few years ago. Chikako Yamada, Tellme Club President, however, explained at a news conference in March 27, “That resulted in higher operating costs for little profit.”

The bankruptcy began with a default of 0.4 billion yen to IATA on March 23 2017, Yamada said. “We tried to finance from sponsors or banks, but we judged on March 22 that we failed it.” Although she denied a shoestring operation, she admitted her misjudgment to the management.

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In Japanese

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