The Travel Sector's FX Problem Isn't Volatility. It's Control.

Ask any travel finance director what keeps them up at night and exchange rates will be near the top of the list. They’re right to worry, but the rate moving against you is the symptom everyone fixates on. The real risk is losing control of two things at once.

The first is your hedging. In most travel businesses it’s scattered across half a dozen banks and brokers, with nobody holding a single, current view of the total position. You can’t manage what you can’t see.

The second is your cash. As consumer protection tightens across the sector, customer money is increasingly ring-fenced and untouchable, which makes the cash that FX hedging can suddenly demand, through margin calls, far more dangerous than it used to be.

FX risk management isn’t only about protecting your P&L; it’s about protecting the cash position of the underlying business. HedgePoint™, JSP’s treasury technology platform, is built to do both. Below, we set out why travel is one of the most FX-exposed sectors in the economy, why those control problems hit travel operators harder than most, how HedgePoint closes the gap, and why we’re opening the platform to the first five travel businesses free of subscription fees.

Travel is built on a currency mismatch

The exposure is baked into the business model. A UK operator sells a holiday in sterling, often many months before departure, then pays the hotels, ground handlers, cruise lines, transfer companies and airlines that deliver it, frequently in euros, dollars and a long tail of other currencies. Revenue in one currency; a large share of the cost base in others. That gap is the exposure, and in aggregate it is enormous: ABTA’s membership alone accounts for more than 4,300 travel brands with combined UK turnover above £40 billion.

It’s also heavily weighted towards the euro. The UK’s most popular summer destinations, what ABTA calls the “Sunshine Seven” of Spain, France, Italy, Portugal, Greece, Cyprus and Malta, all use the euro. For a typical outbound operator, a very large slice of the cost base is denominated in a single foreign currency that moves against the pound every day.

Four features make that mismatch unusually dangerous in travel:

• A long exposure window. Holidays are sold months, sometimes more than a year, ahead of travel. The price is fixed to the customer at the point of sale, but supplier payments fall due far later. Everything that happens to the rate in between lands on the operator.
• Thin margins. Travel is high-volume, low-margin. When net margins sit in low single digits, a few percentage points of adverse currency movement on the foreign-currency cost base can erase the profit on a booking, or on a whole season.
• Limited ability to reprice. Under the Package Travel and Linked Travel Arrangements Regulations, operators can only pass on currency-driven surcharges within tight limits, and not at all close to departure. The price you sold at is, in practice, the price you live with.
• Prepayments and refunds. Deposits to secure allocation crystallise currency commitments early, while cancellations and refunds, as the pandemic showed at scale, can throw planned cash and currency flows into reverse.

A two-way market, not a one-way bet

The temptation, especially after a settled spell, is to assume the rate will drift in your favour and simply ride it. Sterling’s outlook for 2026 is a reminder of why that’s a gamble rather than a strategy.

The major banks’ forecasts for the year span an unusually wide range against the dollar, broadly 1.35 to 1.47 on the consensus view, with some calling for lower, which reflects genuine two-way uncertainty rather than a clear direction. The interest-rate differentials that have underpinned the pound are widely expected to narrow, and UK fiscal and political uncertainty remains a live downside risk. Against the euro, sterling has been unusually range-bound, but the very support holding it there is forecast to fade.

None of that tells you where the rate will be when your supplier invoices fall due. That’s exactly the point. In a two-way market with thin margins and a long exposure window, hedging isn’t speculation. It’s how you protect a price you’ve already promised your customer. The question is not whether to hedge. It’s whether you can actually see and control the hedges you’ve put on.

Cash is king, and the rules are tightening

Here’s what has changed, and why it raises the stakes on every currency decision an operator makes. Following a string of high-profile operator failures and the disruption of COVID-19, when some businesses struggled to refund customers because the money had already been spent on working capital, there has been a sustained regulatory push to strengthen how customer funds are protected. The Civil Aviation Authority’s ongoing ATOL reform programme has been consulting on stopping ATOL holders from using customer money as working capital, requiring it to be segregated instead, with trust and escrow arrangements emerging as the preferred model over traditional bonds. The direction of travel is clear, even if the final rules are not yet settled: more of your customers’ cash, ring-fenced, for longer.

If you’re assessing a travel company today, one of the first questions is simple: how is customer money protected? The common answers are:

• ATOL, for flight-inclusive packages
• Bonding
• Insurance-backed protection
• Independent trust accounts, increasingly common

Trust-account providers such as Protected Trust Services have grown quickly precisely because they offer full segregation of customer funds until travel takes place. That is good for consumers and good for resilience. But it has a consequence that goes straight to the heart of FX risk: if customer money is locked away until the holiday is delivered, it is not available to fund the day-to-day business, and it is certainly not available to meet a margin call.

This is where currency hedging and cash protection collide. When you hedge with forward contracts, an adverse move in the market can trigger a margin call, a demand for additional cash collateral to cover the mark-to-market loss on your open position. In a business where customer money is segregated and working capital is already tight, that call competes for cash you may not have to spare. The hedge is doing its job of locking in the rate, but the collateral it demands can create a liquidity crisis all of its own. And this is no theoretical risk: in 2025, insolvency specialist Begbies Traynor’s Red Flag Alert reported a sharp year-on-year rise in travel businesses showing signs of financial distress.

So in travel, getting FX right means protecting two things at once: the margin on the holiday you have sold, and the cash position that keeps the business solvent and compliant. Cash really is king, in an industry where consumer protection is strengthening, FX exposure is structural, margins are thin, and competition is relentless in a crowded marketplace.

Why one broker is a single point of failure

If cash is king, then where you place your FX matters as much as whether you hedge. Keeping everything with a single broker feels simpler, one relationship, one portal, but it concentrates two separate risks into one point of failure.

Counterparty risk

Most non-bank FX brokers are authorised payment or e-money institutions, not banks. Customer money is “safeguarded”, held separately, but it is not covered by the Financial Services Compensation Scheme, and a forward contract is simply a bilateral obligation with the broker. If that broker fails, your open hedges, your balances and any collateral you have posted are all caught in the same insolvency at once, with no diversification to fall back on. Recovery is neither quick nor certain: across twelve UK payment-firm insolvencies between 2018 and 2023, the FCA found an average shortfall of roughly 65% between what customers were owed and what had actually been safeguarded, and where money could be returned at all, it took an average of more than two years.

This is not a hypothetical. In little more than a year, a series of UK FX and payments firms has been placed into special administration: Argentex LLP (July 2025), Currency Matters Limited (October 2025), JNFX Ltd (November 2025) and Halo Financial (May 2026), each freezing client accounts overnight. Argentex is the most telling: a listed, FCA-regulated provider serving around 2,000 corporate clients, it failed not through fraud but because a sharp move in the US dollar drove the margin it had to post faster than it could fund. Clients’ forward contracts were frozen and could not be moved to another provider. The collapse of Rational Foreign Exchange shows what recovery can look like, a High Court distribution plan left customers expecting around 7.7 pence in the pound, and those whose claims were for posted margin rather than safeguarded funds ranked as unsecured creditors and recovered nothing at all. Further back, the 2018 failure of Premier FX, which had not safeguarded customer money, left clients facing the loss of their funds outright; they were eventually made whole only by an exceptional voluntary payment from the firm’s bank, an outcome no business should ever rely on.

The common thread is that every one of these firms was authorised and regulated. Authorisation is not the same as safety, and any business that had concentrated all of its currency exposure and cash with a single one of them would have lost access to everything at once.

Collateral call risk

Concentration cuts the other way too. Put all of your forwards with one broker on margined terms, and a single adverse move produces one large, concentrated margin call covering your entire book, a demand for cash, due immediately, that you cannot meet from segregated customer funds and may not have to spare. With everything in one place there is no alternative credit line to fall back on, and no leverage to negotiate. Spreading exposure across several well-capitalised providers reduces the size and concentration of any single call. Better still is to take margin calls off the table altogether, which is exactly what JSP’s facilities are built to do.

The blind spot: no single view across your providers

Spreading your FX across several banks and brokers is the right response to all of this: it diversifies counterparty risk, spreads credit and margin requirements, and keeps pricing honest. But it creates a problem of its own: the moment your hedging lives in more than one place, you lose sight of it.

The result is that positions sit in five or six different portals, statements and spreadsheets at once. And so the questions that should be simple become hard:

• What is our total exposure in each currency, right now, and how much of it is hedged?
• What’s our weighted average hedged rate, and how does our hedge ratio compare with policy?
• Which provider is actually giving us the best price, and how much are we leaking on spread to the ones that aren’t?
• What is the whole book worth, marked to market, today?

When the answer to each of these requires logging into multiple systems and rebuilding a spreadsheet, three things follow. Hedge ratios become guesswork, so firms drift over- or under-hedged without realising. Value leaks quietly, because without a consolidated benchmark you can’t tell who’s competitive. And treasury spends its time reconciling statements and chasing rates, firefighting, instead of managing risk to a clear policy. It also makes governance harder: demonstrating a coherent hedging policy and its execution to your board, your lenders and your auditors is far tougher when the evidence is spread across disconnected tools.

HedgePoint: protecting both your P&L and your cash

HedgePoint is built to give travel businesses back control of both, their FX position and their cash. Because FX risk management is about protecting your P&L and protecting your cash, and HedgePoint does exactly that.

It protects your P&L

HedgePoint sits across all of a travel business’s banking and broker relationships and consolidates them into a single source of truth, so the position you see is the position you have, across every provider, in real time. Because everything is in one place, you can spread your exposure across multiple well-capitalised banks and brokers, diversifying counterparty risk, without ever losing the consolidated view. In practice that means:

• Aggregated positions. Every forward, spot and option across every bank and broker in one dashboard, total exposure, net open position, weighted hedged rate and hedge ratio against policy, on one screen.
• FX forecasting. Currency requirements projected from your sales and booking pipeline, so hedging is matched to real future exposure rather than estimated after the fact.
• Stress-testing. Scenario analysis showing what a given move in GBP/EUR or GBP/USD does to your margin and your cash, so the board can set policy with the risk in full view.
• Broker benchmarking. The rates each provider gives you, benchmarked against the market, so you can see exactly who is competitive and stop value leaking on spread.
• Mark-to-market tracking. Continuous, automated valuation of the whole book, accurate, current management reporting and early warning when margin starts to erode.
• Multi-currency payment management. Payments managed and executed across currencies and providers from one place, tied back to the underlying hedge.

It protects your cash

This is what sets HedgePoint apart for a sector where customer money is increasingly ring-fenced. HedgePoint actively manages and caps mark-to-market exposure so that a market move can’t snowball into a margin call. And through JSP’s lender and broker network, we can source and underwrite large, margin-call-free hedging facilities. With the right facility in place, a move in the market can never trigger a cash collateral call, whichever way it goes. Your customers’ segregated funds stay where they belong, your working capital stays intact, and your hedging protects your margin without ever threatening your liquidity.

It gets your FX policy right

None of this works without the right policy, the hedge ratios, tenors, instruments and triggers that fit your specific exposure and risk appetite. HedgePoint uses AI to design and continuously refine that policy around your own data, turning what is usually guesswork into a disciplined, evidence-led process. In a market this competitive, getting the policy right is itself a source of edge: a lower cost of currency, steadier margins, protected cash, and the confidence to price and compete from a position of strength.

The shift is from reactive to proactive. Instead of assembling the picture after month-end and hoping a margin call doesn’t land at the wrong moment, treasury starts each day in control, and HedgePoint users carry a genuine competitive advantage into a crowded marketplace.

Why we’re starting with travel

We’ve looked hard at where treasury technology is most needed and least available, and travel is the clearest case. The FX risk is structural and material; the regulatory bar for protecting customer cash is rising; the sector is fiercely competitive; and yet the tooling sits at two unhelpful extremes. Enterprise treasury management systems are powerful but expensive and heavy, overkill for most travel businesses. At the other end, firms run sophisticated, high-value currency books on broker portals and spreadsheets. There’s a gap in the middle, and it maps almost exactly onto the large, privately owned operators JSP is built to serve.

So we’re doing something deliberate about it. We’re opening HedgePoint with no subscription fee to the first five travel-sector businesses that join us. This isn’t a discount, it’s a commitment. We want to prove the platform’s value in travel, build a foundation of reference clients in the sector, and shape the product around the way travel businesses actually operate.

We can do this because of how JSP is structured. Our model is built around our lender and broker partnerships rather than client subscriptions, which means early clients can put the full platform, and our margin-call-free facilities, to work without it becoming another line on their cost base, and without us being conflicted about the advice we give.

The offer

If you run finance for a travel business with meaningful currency exposure spread across more than one bank or broker, you are exactly who this is for. The first five places come with the platform, the onboarding and our team behind it, at no subscription cost.

To find out whether you’re a fit for one of those places, get in touch at www.jacksonswiss.com.

Jackson Swiss Partners is an independent treasury and commercial finance consultancy specialising in FX risk management, international payments and commercial finance for large, privately owned businesses. HedgePoint™ is our proprietary treasury technology platform, combining position aggregation, forecasting, stress-testing, broker benchmarking, mark-to-market tracking and multi-currency payment management in one place.