The travel industry is resilient: Ensuring your business recovers from COVID-19
It’s the thought on almost every business owner’s mind at the moment: will my company survive this pandemic? For business owners in the tourism industry, the unfortunate reality is that many companies will succumb to the devastating economic impacts of COVID-19.
In this blog, we look at the reasons why some tour operators will survive, and others will fall. We detail the likely timeline expected to unfold for the tourism industry over the coming 12 months and provide you with all of the information you need to give your business the best possible chance to survive COVID-19 and go on to thrive after the crisis has passed.
Why some tour operators won’t make it
The unfortunate reality is that many travel businesses will simply not be able to withstand the economic impacts of COVID-19. As a tour operator currently creating plans to keep your business alive, it’s equally as important to understand why some businesses are failing. Knowing the ‘why’ will allow you to proactively lookout for warning signs and will ultimately help inform your business’ survival strategy.
The following list details the most common reasons why tour operators are not able to survive COVID-19. For many, it will be a combination of these factors.
- Overcapitalised: the cash runway (length of time a business’ cash will last at the current spend rate) was not substantial enough to withstand the sudden and sustained drop in business.
- Government support: the business is based in a country or region where government support is limited or nonexistent meaning that they had no support to fall back on when their income stream suddenly dried up due to border restrictions.
- Overexposure to labour costs: the business relied heavily on human labour for tasks where software and/or processes could have increased efficiency. Wages are a large investment and account for a large portion of business costs.
- New business or recently purchased business: the business being recently established or purchased may mean that they were relying on uninterrupted travel and tourism to grow financially and gain exposure. As circumstances have changed they do not have the cash to fall back on.
How to make sure your business recovers from COVID-19
Now more than ever, people and businesses want security and assurance that everything will indeed return to some version of normal. The best way to provide this security is to understand the likely timeline and how your business fits into it. This will ensure your company keeps moving forward, giving you a sense of purpose during this otherwise difficult and confusing time.
During the middle of the crisis, almost everyone is in a state of survival. This means that your cash flow may be uncertain and you may need to make some difficult decisions in order to ensure your business remains viable. This phase is the most challenging; uncertainty, stress and anxiety are rife. Fortunately, this stage will pass.
The duration of this ‘survive’ period will differ between countries depending on how the local government has responded to the virus, however, it’s most likely a 3-5 month period. During this phase, travel restrictions are at their most severe, meaning global travel is at a standstill and your business will be navigating a tidal wave of cancellations and new business enquiries may be virtually non-existent.
While you won’t have itineraries to craft or proposals to send, this does not mean there are no useful tasks to do. Use this time wisely to catch up on admin that has previously fallen by the wayside, reduce operational expenditure as much as possible and look forward to the future as you start updating your business strategy. This eBook, bursting with tips and tricks is your go-to guide to digital marketing strategy.
The next stage involves sustaining the work you did during the previous phase, to ensure that your business continues to survive. On a global scale, the characteristics that define this stage are when we start to see ‘recovered’ cases surpass ‘active’ cases, treatments being developed, vaccine testing continuing and we start to start talking actively about the future.
As active cases start to drop, border restrictions will ease and a small number of enquiries for future travel may begin to trickle in. For your travel business, this may not necessarily mean an immediate increase in revenue, but the promise of future revenue. During this stage, the cost-saving measures you enacted will likely need to be continued. For outbound tour operators, pivoting to domestic tourism is a smart way to give your business an opportunity to generate income sooner, as travelling domestically or even between two COVID-19 free countries (and a European example), is likely to happen before international travel opens up. Self-driving tours are set to surge in popularity, along with train travel due to passenger’s ability to distance from one another much easier than on a plane.
This time is also an excellent chance to check in with your customer database and start to get people dreaming about their next trip with your company. Get inventive, maybe this includes asking them to start working with you to plan a holiday now while you have time to dedicate to them. This may even involve putting a deposit down on a non-date specific holiday. There is a world of opportunity here to ensure your customers continue to engage with and remember your brand.
People around the world are going to be itching to travel and return to normality as soon as they can. However, it’s certain that travel is going to look a lot different post-COVID-19, and travellers are going to be looking towards industry professionals to help them navigate these changes. Taking steps to grow your brand presence during this stage will mean your business will be front of mind to plan trips that are enjoyable, stress-free and most importantly, safe.
When international tourism does return, many believe that it will surge. Pent-up demand from travellers whose trips were cancelled, those wanting a holiday to book-end a stressful year and global travel brands making efforts to get back on track will all contribute. This is your time to thrive.
This phase will look different for everyone depending on a variety of factors; the situation in your business country, the readiness of your target market to travel again, and of course, the efforts you have put into your business in the previous two stages. Ultimately, this phase is a fine balancing act where you will need to prepare for this anticipated uptick in business, whilst also keeping operational expenditure down in the lead up to the boom. You may need to hold off on hiring new staff, or you might be ready to jump right in – it’s a tricky tightrope to walk. Thankfully, the planning, digital marketing and promotional collateral you have spent time working on will be paramount in helping you navigate this change in a cost-effective way.
Implementing tour operator software during this phase will help you to balance the need to scale up your operations with the need to keep costs down. Many travel businesses are reducing staff numbers in order to stay afloat during COVID-19. Ultimately, although staff are an extremely valuable asset to your business, software is scalable, reliant and will consistently support your business during tough times. ‘Employing software’ will help your business get back on track and to a place where you can easily ramp up again and boost your staff numbers when travel begins to bounce back