Covid-19: Our State of Flux

It would be the perfect excuse to bulk our view of change, allow fear to dominate our thinking as a business, and bury our head in the sand. However, to paraphrase a beloved writer the world over in responding to fear and wishing away tumultuous times, “so do all who live to see such times, but that is not for them to decide. All we have to decide is what to do with the time that is given to us” – JRR Tolkien.

Flux, true to its name, was founded in a time of unbelievable change, a global event the likes of which it has not seen in over a hundred years. Critically, we as a business however are staying true to our mission and are actively seeking positive means of integration for ourselves and our clients during these uncertain times. But with the world in so much turmoil, how do you apply the right strategy and actions?

We at Flux thought it best to start by establishing what we do know – our undeniable truths as we call it. We believe two truths of relevance to be;

I know for the more change-adverse that may not offer much comfort. This represents more “other” ways of doing things, and for many businesses this can seem unsettling. However, there is some light at the end of this tunnel if you imagine what the “unusual” becomes a catalyst for in the years to come.

As more and more businesses withdraw from new customer acquisition strategies, marketing campaigns, and disengage from their client community there is significant opportunity for travel brands to diverge from this trend and own their own personal travel narrative, create goodwill, and be remembered by existing and future prospective clients after this period. According to research conducted by Bain and Company, businesses that were able to prioritize marketing during periods of recession by building sustained brand value and awareness, have historically shown faster rates of profit recovery than those that stalled their marketing efforts.

Reports emerging of travel brands showing solidarity and goodwill to their client base, such as Delta Airlines flying medical volunteers for free, or the Four Seasons in New York City providing free rooms for healthcare workers, will be the brands remembered when booking in a post-Covid world. Destination based marketeers are also providing examples of effectively striking the right tone of hope and solidarity, with campaigns such as South African Tourism’s “Dont travel now so you can travel later” or Visit Las Vegas #OnlyYou campaign.

Collaborative campaigns such as AndBeyond and WildEarths WILDwatchlive is another example of staying front of mind and connected to clients and trade partners, creating sustained value by bringing travel to them via virtual safaris.

Covid-19 will prove an accelerant for digital but also entropy for those unable to evolve. What do I mean by that? At the time of writing this, many people in industries that formerly prohibited working from home have been forced to adapt to a new way of working. Telecommuting may prove painful for the less tech-savvy in the early stages of Covid-19, but the longer policies of lockdown and self-isolation stay in effect, the more relaxed remote work policies will become after the pandemic has passed, with employer confidence in remote productivity becoming commonplace. This will not only affect how we work, or what work-life balance looks like, but also lowered resistance to engaging and transacting with brands online as digital becomes mainstream (not just reserved for the millennial). This can be seen most prominently in essential service businesses turning to digital to create fulfillment ready websites. Considering this accelerant, travel brands with their own digital presence and fulfillment ready digital platform will be at an advantage. Prior to Covid-19, 47% of accommodation bookings were projected to be made online in 2020, increasing to 60% by 2023. With digital adoption currently on fast forward, you would expect that number to significantly increase after the pandemic has passed.

Our next truth is,

Yes, Covid-19 has brought the industry to a complete standstill. However, it is important to remember that the industry was healthy and breaking records prior to the pandemic, and is an innately resilient industry, with a proven record of having weathered many catastrophic events throughout world history. Covid-19 may seperate itself from these past events in that no economic modelling can predict exactly when this rollercoaster will come to a halt, but travel brands must be prepared to evolve with an industry whose face may appear different to the one we knew before Covid-19. This period of limbo allows an opportunity to reset and calibrate, and look to macro indicators in the movement of people. Some of which have already to emerge, such as;

With China proving an early case in point with its domestic flights and hotel bookings showing the first signs of recovery and return of consumer confidence. According to McKinsey and Company, some of their preliminary modelling suggest domestic travel may recover within two-to-three quarters, against that of long-haul international travel’s six quarter estimate. Predictive modelling aside, this seems logical – whilst the pent up traveller demand in their individual capacity may wish to resume international travel (as witnessed with a healthy rebound shown after the SARS outbreak in 2003), Covid presents a very different beast with governments placing much higher precautions against the risk of further spread as seen with international travel bans and quarantines implemented in over 130 countries. Travel brands that can engage and offer the relevant product to their domestic travel market, may be able to create a vital early stage cash-flow reprieve and uncover a sustainable longer term source market for the future.

A price reset for the service providers within the industry will likely be in order to match new demand signals shown by the market. With consumer confidence shaken, and demand shock up to six times greater than that of 9/11 according to McKinsey, price flexibility will be key for many businesses. This again represents an opportunity to show goodwill and understanding, rather than take hard lines on prices that have not adjusted with the new reality. Travel brands that are agile and able to rapidly adjust their pricing strategy, create incentives around price points and payment terms, or encourage postponement ahead of cancellation will be well matched to new levels of demand.

To do this will take a significant amount of collaboration between service providers and intermediaries, which is why the same flexibility and incentive needs to be applied within the supply chain. The international travel marketplace platform, Get Your Guide, has shown proactive examples of this in changing their service provider payment terms to bi-monthly, and working with their service providers to create more relaxed consumer-facing booking terms. The key principle to apply here will be changing policy in a way that encourages travel, working collaboratively with service providers, and having effective platforms to communicate that to guests.

With a global emphasis on health, safety and cleanliness “no touch” or contactless digital solutions for travel are more relevant than ever. Mobile technologies allowing contactless payments, and contactless access via ticketing, boarding passes or keyless hotel access will receive more widespread adoption. With increasing consumer trust via digital engagement and transactions, travel brands that are able to leverage technology to create safe means of travel, will be at an advantage. The move to mobile will be further accelerated, and having a fulfillment ready mobile presence that facilitates contactless booking or ticketing will allow guests to feel safe and take health and safety precautions.

These are our truths informing our actions as a business. Unfortunately, there is no crystal ball in this story, but what we can do is learn from history, keep our ears to the ground in a highly interconnected world, and use our expertise in digital and travel to bring you new information as we uncover it. The survival of all businesses will require now, more than ever, large doses of creativity, empathy, and the ability to pivot toward a new competitive landscape. It is a tall ask to get all of this right, but the good news is that the effective use of digital technology and thought leadership make it all possible.

We welcome you to engage with us as we share our insights in the coming weeks on how to leverage digital to navigate this storm together. Our mission remains to bring travel brands of meaning and impact into the digital world. We are here to stack all conditions in your favor, under these new business conditions, as the world gradually becomes a little clearer.

Until next time, take care and stay safe.

Sadly the effect of Covid-19 runs deep with the halt of tourism having devastating effects on the continued protection and restoration of wildlife and wilderness areas dependent on tourism for funding. Currently, many hospitality companies built on a conservation based tourism model risk not only insolvency, but also an inability to continue protecting the wildlife and wilderness areas they have dedicated their lives to protect. If you are able, please consider making a donation to 1% for the Planet’s wildlife beneficiaries by visiting the page linked here.