Peter Bates, President of Strategic Vision, issued this briefing to luxury hoteliers and their suppliers this morning, Friday 13th March 2020:
What a difference a month makes. Just a few weeks ago, I sent you the results of our annual Pulse of the Industry Survey, reflecting a mostly sunny outlook for 2020. Most respondents forecasted continued growth in revenue and bookings, their optimism quashing any concerns about terrorism, natural disasters, or economic uncertainty.
But then Wuhan sneezed, and the rest of the world started catching cold. I don’t have to tell you about the major disruptions that coronavirus has already caused. The real questions are: How bad will things get? And what do we do to get through?
I’m afraid none of us can answer the first question, which depends largely on the speed and lethality of the virus as it spreads around the world. The initial analyses I’ve seen are pretty staggering: According to new research by the Global Business Travel Association, coronavirus could cost $820 billion in lost revenues in 2020. That’s more than half of the projected total spend for the industry this year.
For the second question, we asked a few members of Strategic Vision’s travel advisor research panel to understand how they, and their clients, are reacting to the crisis and preparing for the immediate future. Here is what they’ve shared with me.
First the bad news: Understandably, the majority of travel advisors we surveyed said their outlook on business for 2020 has worsened since the beginning of the year. Everyone is seeing cancellations and a slowdown in new requests, mostly for China and the rest of Asia; and Europe, especially spring trips. Cruise business has plummeted. Some agencies, especially those with substantial corporate business, have begun laying off staff or going to a four-day work week. But let’s remember: We have been through this before! Remember 9/11, the Iraq war, SARS, the financial crisis. We persevered through all of those and turned out for the better. And so, I’m sharing what have turned out to be tried-and-true methods to survive what could be a protracted slowdown.
- Communicate, communicate, communicate. Don’t let the news media do the talking for you. This is the time to be forthright and transparent with customers and partners. “Let people use facts to decide, rather than fear mongering,” said Mark Lakin, Co-Founder at Epic Road, who is sharing “raw data on infection rates, mortality rates, and how to keep safe.” Everyone on your frontline team needs to be educated and up to date, said Judy Stein, President of The Stein Collective at Ovation Travel. “We are being proactive to make sure advisors are well prepared to answer every question imaginable from clients. Advisors are being briefed multiple times daily on various topics—insurance updates, virus outbreak updates, airline changes—and we are encouraging constant communication with clients.”
- Keep things in perspective. All the breaking news alerts about new cases, death rates, and plummeting markets are drowning out the more balanced news—like the fact that most places in the world are NOT affected by coronavirus, or that more than half the reported cases have already made full recoveries. (It’s worth sharing this live count of cases, deaths, and recoveries from Worldometer.) “We are educating clients about geography and putting it into perspective,” said David Lowy, President at Renshaw Travel. “I remember Micato publishing a map during Ebola showing that London and Recife were closer to West Africa than Nairobi was—very helpful.”
Another way to contextualize the virus is to remind travelers that, according to the CDC, seasonal flu has already infected 34 million people and caused 20,000 deaths in the U.S. alone this season. And most people don’t think about canceling their trips due to the seasonal flu.
That said, don’t tell people that something is “safe.” Just arm them with the facts and allow them to draw their own conclusions.
- Flexibility is key. Advisors are trying to convince clients not to cancel until they absolutely have to. For summer travel in particular, try to stave off any final decisions—after all, it’s harder to get a client to rebook a trip than to hold onto what they have. “Our advice is to not reschedule the same itinerary for a later date but wait and see until we have a better understanding of the whole situation,” said Judy Stein. “Once we see the light, which will hopefully be sooner than later, we will then reschedule. Of course, we are assessing this on a case by case scenario, and if it is a trip that can easily be pushed back from spring to fall, or one year from now, then we will do so.”
For suppliers, that means bending their normal cancellation policies. Don’t put clients in a bind and make them decide right now about a trip that’s still a month or longer in the future. Given the lack of clarity about how bad the virus will be, you’re essentially asking them to cancel. (And rebooking those rooms or berths is going to be more challenging than usual.) This will require some adjustments to your normal operating procedures but being accommodating will earn you points with both travelers and travel advisor partners. “There is one word that the traveler notices: Flexibility,” said Jim Strong, President at Strong Travel Services. “Don’t lock them in.” And remember that relationships matter: Partners and suppliers who are accommodating now will benefit in the long term.
One thing to be a bit less flexible on is pricing: In past crises like the Great Recession, luxury travel suppliers learned that discounting isn’t always a good idea. Better to think of other ways to incentivize customers than by drastically cutting prices and hurting your bottom line.
- Offer up alternatives.A recent survey from Skiftnoted that 81% of Americans are holding onto their travel plans for now. Indeed, most of the advisors we spoke to are rerouting or rescheduling clients’ trips rather than stopping travel altogether, especially for spring break and early summer bookings. “Clients still want to travel but stay closer to home. This means more Caribbean, West Coast, Florida, and Mexico,” said Judy Stein. “We have been pushing alternative destinations, especially Australia, trying to convince people to swap one bucket list trip for another,” said Jack Ezon, Founder and Managing Partner at Embark Beyond. In fact, his firm’s recent surge in Australia bookings has already made up for the business they lost during the bush fires.
In addition to the Caribbean, Hawaii, and the rest of North America, other destinations perceived as “safer” choices, for now, include South America, Africa, and the South Pacific. Affluent clients in particular are looking for smaller, more remote destinations, and considering cloistering themselves in villas, private yachts, and private jets. Another alternative: staycations and drive-market destinations. Hotels and tourism boards should be amping up their local marketing efforts right now to attract travelers who are wary of flying.
Many travelers are less concerned about contracting the virus than about getting stranded due to airline schedule disruptions or quarantines. Destinations with plenty of direct airlift stand to benefit from that, and travel advisors should underscore their ability to get clients un-stuck when flights are canceled—much better than going at it alone.
- Keep talking—and thinking about the next chapter.
As marketers, sometimes our first instinct during a crisis is to clam up. Pull our advertising, slow down on social, put our heads in the sand until the danger has passed. That’s absolutely the wrong move right now. You should be communicating about what’s happening where you sit, emphasizing the ways your customers can keep traveling, and inspiring future trips. Even in the midst of a crisis, people don’t stop dreaming and planning for tomorrow, so now is the time to continue messaging and keep your brand awareness high.
Picture this: In six months, three months, or even less, the virus has slowed its spread, the sickened are recovering, perhaps a vaccine is already in the works. People are ready to start traveling again. How will you get them to come back? You should be thinking now about how to tell that story concretely and effectively—and it should be consistent with the story you’ve been telling all along.
Overall, the advisors we surveyed expressed optimism that clients will continue to travel, and the impact of coronavirus will be temporary, as in past crises. “Travel has the ability to connect hearts and minds,” said Mark Lakin. “We need to remain connected more than ever as a global community. Not treat people like statistics, not treat the planet like there is a Plan B.” One potential silver lining: Governments and the media will better appreciate the economic value of travel and MICE, having felt the impact of canceling events like SXSW. Perhaps Damian McCabe, Owner & CEO at McCabe World Travel summed it up best: “This too shall pass!”