There is no way to sugar-coat a situation so dire.
During a recent online panel organised by Arival with four key European figures in the tour operator business on the panel, Tom Jenkins, CEO of the European Tour Operators Association said, “Everyone’s being very sweet and nice, but this is a bloodbath right now, and it’s a jungle as well. So you’ve got a bloodbath taking place in a jungle.”
Sharing their ideas on how their colleagues in Europe should contend with the crisis, the panellists dished out the dirty: there is an 85% decrease in bookings to Europe from China, and there is an 80% cancellation rate for Europe. It’s a double-whammy of increasing cancellations, and decreasing bookings, reported Jenkins.
“We have 10,000 travellers a month, next week, we probably have zero,” said Yaron Burgin, CEO, Abraham Hostels & Tours. “It’s very challenging”.
And how quickly the numbers recover is anyone’s guess. Most of the panellists agreed the spring and early summer seasons are likely lost, and the industry needs to be prepared that this could last up to a year.
“You are looking at a situation where people are fighting for survival, and they have got to balance the need to survive with the need to continue the business by keeping customer relations good. It is a very delicate situation. So we don’t have a set of fix instructions on how to do this,” said Jenkins.
If that is reality and the economic outcome is bleak, what can the industry do to mitigate the impact and survive the fall-out?
“The real topic here should be cooperation. Try as much as we can to cooperate and find ways to stay together,” shared Claudio Bellinzona, co-founder & COO of Musement that is based in the virus hotspot Milan.
Here are some key points of advice given by the panellists.
1. Treat your customers right
The best thing is to have a plan to communicate with customers who have already booked that while you are experiencing volume of calls, you are prioritising upcoming bookings first, so they should reach out closer to their date of departure. And try to convert that sale into a future booking of some kind. Look out for opportunities to reach out to the customers again when things have settled. You treat them well now, hopefully they will come back to you when they are ready to travel again,” advised Stephen Oddo, CEO, Walks.
2. Adapt fast, do things differently
“From the first moment, gather the team and tell them we need to act fast, we need to do things differently because reality is changing every day, very fast. It is crucial to adapt fast and not cling to old habits and old ways of operation. Try and narrow down fixed costs, delay payments as far as possible – cash flow is key. And try to create revenues from different places. For us, the biggest assets are our staff, so gather them all and do creative thinking sessions. For example, we’ve got a few vehicles and we thought instead of using them for regular tours, we use them for party buses and weddings,” said Burgin.
3. Save the booking
Bellinzona recommends that tour operators try and save the booking. Urge customers to keep their credit open, and postpone it for a future date. “We are doing this every time the customer calls and is asking for a cancellation,” he said. We are actively trying to save our bookings.
4. Do not slash prices now
A price war is bad for everyone. Once one starts, others will start panicking and will drop prices. “At this time, it doesn’t matter what the price is. The only thing that matters is to try and differentiate yourself from the competition. If you take the price down, it will be much harder to bring the price up again,” offered Burgin. But Jenkins did point out that discounting, once fears of the virus recede, might be necessary to stimulate demand again. He pointed to the effectiveness of deeply discounted packages, post 9/11, to get people travelling again. “What will drive confidence is people thinking there’s never a better time to do it (travel), let’s do it now,” he said.
5. Don’t panic
This is a long-time crisis. Sit with your managers and see what is the right structure for your operations. Look at your sales and marketing team and see how to repurpose their roles. Some markets are not relevant anymore in this situation, so you may have to shift the team to domestic markets, or stop marketing until you see some signs of recovery. Choose the team members who can rebuild the business with you, said Burgin.
6. Maintain staff morale
Oddo says transparency is important above all else. “Be honest about the situation with your employees. Give them the same information you have.” Added Burgin, “also, give them beer.”
And a final word from Jenkins: “Pray and find a piggy bank of gold coins – that will help!”
