The Coronavirus is having a dramatic effect on every aspect of our lives, presenting a once-in-a-generation test of business continuity and planning. The travel industry is experiencing particularly challenging times, but it’s important to remember that someday, hopefully soon, people will start to travel again. Travel always bounces back after crises! How brands respond now and how they engage travelers during these difficult times will determine how quickly business is able to rebound.
With challenge comes opportunity, and there are lessons for the travel industry to learn from the COVID-19 crisis. The slowdown in travel presents an opportunity to look within an organization, evaluate current ways of working, customer service, inventory and products, and digital infrastructure to reimagine the business for when the demand comes back. Which it will. However, to remain resilient, there are a couple of important actions that travel companies can take now to better position them for crisis recovery.
- Increase the resiliency of your operations: Impact from COVID-19 has been sudden, severe and on a global scale. While recovery will inevitably occur, it is safe to assume that the new normal will be different, and there may be further cyclical effects. This should be a wake-up call for travel companies to build resiliency and flexibility in their business operations.
- Double down on data: Now is the time focus on data strategy to help identify and materialize areas for savings and efficiencies, as well as isolate your core business needs to drive incremental revenue while weathering the storm.
Increase Resiliency of your operations
Even the best-run travel companies have been hit hard by COVID-19. As an example, while a few weeks ago Delta Air Lines shared a record $1.6B in profit with employees, it now sees a 94% reduction number of travelers, compared to the same time period last year. Most travel brands are experiencing similar shocks and it is not unreasonable to think that the future will look different not only in terms of the typical customer profile, which is likely to change but also in terms of customer expectations. Brands do not have to predict what the future will look like in order to be successful, but we believe that they do need to be able to react faster and more efficiently:
- Streamline operations and processes with a bias towards speed and agility rather than perfection. Take a hard look at bottlenecks and root causes (organization, technology or process) and attack them ruthlessly.
- Invest in technology enablers to reduce the cost of changing or building new features. Consolidate and simplify technology architecture as much as possible.
Double down on data
Travel and hospitality brands are in the midst of planning and activating and adapting crisis management, recovery strategies and analyzing paths to rebound. As financial pressures mount, it’s critical to look at all options for operational efficiency and revenue growth. Brands need to emphasize a key enabler to resilience and future growth – a robust data strategy. Gartner revealed that fewer than 50% of documented corporate strategies list data and analytics as key components for delivering enterprise value, but now is the time to shift and adapt. We believe that enterprises need to incorporate a data strategy to stay resilient and prepare for recovery:
- Identify data-led business opportunities and align the opportunities with key customer needs to drive business and customer outcomes iteratively. For example, Airlines should leverage data and assess how they can expand cargo offerings while commercial airline demand is down. We are seeing this in the US as airlines are re-purposing some wide-body planes to transport necessary cargo for crisis aid.
- Be more specific about how you use customer data to fine-tune your offerings. If companies focus on using the right data to understand customer context, it prepares them to be more competitive, relevant and timely.
- Ensure you are optimizing key revenue streams that endure (e.g. credit card, travel insurance, food, and beverage, etc.). Some of these areas remain key modes to engage customers and some areas will recover faster than others.
It is inevitable that there will be fast rebounds and slow movers to adapt, post-crisis. It’s no secret that companies with healthy balance sheets and large cash reserves are better positioned to weather the storm. The travel and hospitality industry has bounced back after many catastrophic events, and in every circumstance, travel has flourished once again.
We believe that travel brands that use this time to streamline operations and define a future-focused data strategy, while also demonstrating resilience and empathy with their customers, will rebound stronger than ever.