Why a revised strategy and plan are needed to rebuild tourism demand?
Certainly, the global pandemic was not a predictable event back in 2019, but it has accelerated many of the foreseeable changes we expected in the future. Many of the changes observed in 2020 will very likely stay in 2021 and beyond including focused segmentation and demand stimulation strategies that both official tourism boards and travel and tourism businesses are implementing.
However, the key question is by when and how the tourism industry will recover? Or, as some think, will COVID-19 change the way people travel and do tourism forever. While indicators showed travel and hospitality businesses were picking up last summer, largely due to leisure travelers, nobody can predict what the future holds. This is especially so as we face new lockdowns in Europe as well as new strains of the virus that increase anxieties around travel booking and consumer confidence, all compounded by the lack of coordinated response among countries and governments.
The latest report from the United Nations World Tourism Organization suggests the global tourism industry will take two to four years to recover, and that recovery may only begin in Q3 of 2021. More worrying is that around 20% of its experts suggest that the rebound will not happen until 2022 due to the major obstacles the tourism industry is facing.
Players in the tourism industry need to revise their strategies to strengthen bookings and stimulate and incentivize demand. They need a comprehensive plan to stay afloat while targeting key segments and repositioning its business for future growth.
MIDAS Aviation has developed a Tourism Restart and Recovery Plan online course that provides governments, official tourism boards and associations, Destination Management Organizations, tourism entities and other players in the tourism ecosystem with tools and the essential guidance to understand the key pillars of a successful tourism restart and recovery plan.
What are the key pillars of a tourism recovery plan?
Chart 1. Source: MIDAS Aviation analysis.
1. Rebalancing priorities and budget reformulation. The only way tourism businesses can survive this crisis is by rebalancing priorities, preserving liquidity and containing costs. The end goal is to quickly restructure the business and use the money raised for debt payments and operating cash flow while staying afloat. In addition, cost containment strategies including building a leaner management structure and aligning the new business structure with current demand needs are key to rebuilding a more agile and recovery-focused operation.
2. Data analytics. A number of data set need to be used to understand market dynamics. Airline schedules, booking activity and average fare and load factor information in addition to travel sentiment and intent to book are a number of them. In addition, a number of analysis should be executed including country and route competitive analysis and airfare comparison analysis among others. Furthermore, a tourism data dashboard covering key performance indicators can supply key insight into market and route dynamics as well as to identify potential opportunities and challenges that will need to be addressed in a tourism and demand recovery plan.
3. Focused segmentation. We have identified at least 12 opportunities to segment the market domestically and 14 internationally from niche focused and remote segmentation, activity and experiential travel, and family travel segmentation to sustainable and self-guided tours, community-based tourism, MICE (Meetings, Incentives, Conferences and Events), Millennials and generation Z among others. In terms of demand recovery, it is expected that domestic demand will recover sooner than international traffic. Therefore and to stay afloat, tourism businesses need to look initially inwards and be more domestic focused.
4. Demand stimulation. We have identified 14 demand stimulation strategies from tourism voucher program, advanced purchase credit program and gift certificates to early-bird promotions, alliances, long weekends strategy, Hospitality loyalty program, fiscal incentives and the implementing of an additional holidays plan among others. Putting the right strategy in place will allow tourism businesses to optimize demand and revenues. Moreover, when demand stimulation tactics are aligned with commercial boosters (refund guarantees, date change waivers and booking flexibility), bookings can be strengthen and maximized.
5. Marketing, communications and branding. As destinations start to plan ahead for the industry’s eventual full recovery, marketing budget shortfalls may impact how destinations market themselves to potential visitors in the future. Tourism businesses need to focus on key areas including personalization, digital trends, programmatic advertising, social media influencers, comparative marketing, online platforms (Crowdsourcing) and opportunistic branding among others. Besides, a bare minimum communicational strategy need to focus on trust, health and safety besides high hygiene standards and protocols. Lastly, it is key to be strategic about the use of word “COVID-19” in advertising to diminish fears and anxieties to book travel.
6. Alliances and partnerships. The participation of both public stakeholders at national and local levels and the private sector is key to succeed. As per a benchmark executed, many countries tourism authorities have partnered with other government entities such as the Ministry of Transport, Finance and Culture to offer holiday vouchers while other countries have involved municipalities as they can bring specific knowledge of destinations. In addition, partnerships can be formed in many other areas including marketing and communications to promote special offers, products and travel experiences.
7. Stakeholder collaboration. To rebuild travel confidence and demand faster, the end-to-end travel ecosystem (airlines, airports, governments and tourism boards, health organizations, hotels, restaurant, tours operators and DMO, among others) needs to work together. For bookings to be optimized, the travel and tourism sector need to build bridges and strategies to diminish visitors fears to travel. In addition, to put together a sound recovery plan that presses on all traveler anxiety buttons. Key areas of collaboration include joint communications, high hygiene and protocols alignment, personnel training, commercial cooperation and data analytics among others.
8. And finally, technology, innovation & up and re-skilling. There are a number of innovative contactless and low touch technology solutions that can assist to boost travel demand and sales while providing visitors peace of mind. Technologies such as biometrics, thermal screening, wearable devices, augmented reality carpet solutions to manage queues, among others are being deployed. Moreover and in terms of training, destination knowledge, risk management strategies, vertical sales solution, focus on selling travel experiences, new hygiene standards and customer trends, among others should be considered to optimize bookings and sales. This “pause in demand” time is the right opportunity to up and re-skills your organization.
To conclude, both governments and tourism boards need to focus on putting together financial incentives and communicational campaigns at provincial, domestic, regional and international levels to rebuild bookings and demand. In addition, consulting and engaging the private sector is key. The following chart shows an example of such collaboration as it brings all players together (government, official tourism board and the private sector) in order to develop a sound multi-step and multi sector tourism and demand recovery strategy.
Chart 2. Expanded support strategy to rebuild tourism demand. Thailand government. MIDAS aviation analysis. Notes: Note: E-T-E (End-to-end) travel chain: Hotels, travel agencies, restaurants, airports, etc. SME: Small and Medium size Enterprises. DMO: Destination Management Organization. MKT: Marketing. NPSD: New Product and Service Development
- Rene’ Armas Maes