By Chris Aitkin, CEO at Rezdy
We are currently entrenched in potentially the most significant crisis of modern times. The COVID-19 pandemic has affected us all with, sadly, many catastrophic effects. Before it’s over, it threatens to have had the emotional impact of 9/11 alongside global economic devastation comparable with the aftermath of the two world wars.
While it’s very easy to be overwhelmed by the terrible impact on the health of our various nations and of people around the globe, a catastrophe such as this can also provide new opportunities and compel us to alter our focus.
We are in hibernation now - certainly as travel consumers, but also as professionals. Regardless of our role within the travel ecosystem, the focus of our “work from home” efforts can broadly be categorized into two areas:
Managing the business through the specific impacts of the crisis
Planning for a return to some sort of normalcy
1. Manage the immediate cash crunch
When managing any business, it’s always important to think about cash flow. But that has never been truer than now. All efforts should be focused on managing that scarce resource in the light of travelers not booking experiences, and due to the uncertainty of when they will again.
If you can do without a good or service, consider removing it now. Cut costs hard and quickly, as you’ll never get that money back. You should actively pursue other ways to bring cash into the business, too, to help extend your ability to survive the shutdown.
Unprecedented packages are being announced by governments that really are as good as they seem, including the Job Keeper payments in Australia and forgivable payroll loans in the United States. Make it a priority to understand them, and make good use of them. Explore all routes and be creative in how you seek to provide extra cash relief.
You might consider offering short-term products, such as virtual experiences, or pivoting how you use your existing resources to generate revenue. Work on structuring payments or commercial terms with your partners, bearing in mind that they may also be suffering. Keep a watchful eye on future debt levels, if you possibly can.
2. Take customers on the journey
It is critical at this time to keep communicating with your customers, whether they have an upcoming booking or are waiting for the confidence to book in the future. Ensure your message strikes the right tone and cadence, and is also clear and valuable.
For customers with open bookings, try to balance sympathy with reassurance in your messaging. Back it up with the flexibility to retain that booking through vouchers, even if the time has to change. That same approach, when applied to potential, returning customers, will help build the confidence to book ahead of their next experience. If you get this right, they’ll be your lifeline when they can travel again.
3. Ensure a fast recovery
The biggest opportunity we have right now is time. It’s a precious gift, if you allow yourself to accept it. Use it to build the future you want, because the travel industry will resume. It’s highly unlikely you will have the chance to reimagine your business in the same way again, so now is the time to dare to dream and ask hard questions.
Some people I’ve spoken with in the experiences industry have been asking themselves, 'Do I want to be doing this anymore?' That’s a good place to start - seriously.
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Some people I’ve spoken with in the experiences industry have been asking themselves, ”Do I want to be doing this anymore?” That’s a good place to start - seriously. The answer will likely be “yes,” but do not be afraid to ask the question, nonetheless.
Conventional wisdom is going to be threatened by this disruption, so don’t be constrained in the way you approach your thoughts on what to do and how to do it. There is both an internal and external aspect to this new blueprint for your post-COVID-19 business, and it will unfold in stages. What will you be to the external world? The products you sell and to whom can all be reshaped now.
What are the new travel consumer norms you’re best positioned to capitalize on? Who are the best partners to explore that with? How do you want it to operate? The ways of working, where you work and how you use technology have never been as easy to change as they are now. You can reimagine it all and introduce a new business model when we reemerge from this forced hibernation. Be laser-focused on what elements worked before and will be transferable to the recovery, while also embracing the opportunity to change.
4. Consider expected shifts to the industry, post-recovery
The experiences industry is primarily different due to its in-destination dimension. Close to 80% of bookings are made while in-destination, in the last few days before an experience is taken. This is quite different from hotel and airline bookings.
The world that we will unfold after we reemerge will retain that dimension, but with some distinct differences - at least during the initial period. The notable differences expected, post-recovery, include the following.
The experiences sector will be the quickest sector of travel to return. Once any hope of freedom of movement is on the horizon, consumers will be ready to make a booking in the “drive” market - those destinations and experiences that are an easy drive from home.
Very limited international travel for the foreseeable future. Driven by government restrictions of movement and consumer trepidation, international travel will be dramatically lower for the foreseeable future, which will undoubtedly create notable shifts within the experiences industry.
Travelers will be happy to pay full price for experiences. Pent-up travel desires due to lengthy isolation coupled with savings on accommodation or flights will encourage travelers to pay full price for experiences, even as they continue to overcome negative impacts on their household finances.
OTAs can play a massive role. Although often criticized, online travel agencies do reach travelers and bring them to your front doorstep. They can play a similar role to the one they played for the hotel industry after 9/11.
Not all experiences will be equal. Residual consumer fear will cause people to be highly aware of the social distancing aspect of their travel experiences, even after social distancing is no longer necessary or required. Hop-on, hop-off bus tours will have a harder time addressing this than walking tours, for example, so not all experiences will be looked at in the same way anymore.
5. Prepare your business to reemerge
The way forward will - and needs to be - unique to your business. While there are many practical elements to consider before bookings and operations resume, here are six tips to help operators prepare for the recovery.
1. Get your direct sales strategy right. You need to be ready to capitalize on the demand once it returns. Make sure your website is the best storefront it can be and offer booking flexibility so it can be rescheduled, should the outlook change.
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2. Adapt your product but hold your nerve. Recognize travelers’ lingering fears when they return and ensure your product is visibly addressing them. Channel your personal feelings to test whether your product is socially distanced to a suitable degree as well as how you’re feeling about paying for the things you value. Hold your price and ensure your resellers are doing the same. The industry needs your product to be great, so trust what you know to deliver that.
3. Pick your trading partners well. Reexamine the value your reseller partners bring. Some OTAs will double down and recognize the central role of experiences in the broader travel experience, truly creating the connected trip. Others will decide it’s not significant enough of a play to distract from rebuilding the core.
While local partners like hotels may take time to recover occupancy rates, consider new options like Groupon, which recently announced a shift towards selling “things to do” rather than goods. As a global business with strong “local” credentials, they might provide quick cash ahead of the actual delivery of the experience.
4. Keep control of reseller channels. There were negative consequences for hotel operators after 9/11 when, in the desperate hunt for post-crisis bookings, they allowed a few dominant OTAs to grow. Diversification of reseller channels goes a long way toward retaining the power balance. Make sure you are connected with many OTAs, both online and locally. Defend your corner on both commission levels and practices such as bidding on your experience name and heavy discounting.
5. Let technology do the work. There will never be a better time to consider how a well set-up software stack can help your business recover and thrive. A good, sophisticated solution can automate both operational and trading requirements. The more professionals automate, the more they can focus their talents - and those of the people facilitating the customer experience - on ensuring those visiting have an unforgettable experience.
6. Lean on the in-destination community. The experiences industry is what Arival calls, “the best part of travel.” Behind this catchphrase is a community rich with passionate and knowledgeable people. Seek out the thoughts and opinions of those in the industry to inform your path. There are plenty of free resources available. For example, Rezdy started #Together4Tourism to curate articles designed to help professionals through this challenging time, and there are many others doing the same.
Needless to say, this is unprecedented time for travel industry professionals worldwide. While it is undoubtedly difficult for many, it may also spark lasting changes to how experiences are booked, managed and perceived. Those who view this time as an opportunity to innovate will be in the best position possible to thrive and provide meaningful experiences to future travelers.