Focus on finding customers who want and need a professional service, says Cosmos and Avalon Waterways chief executive Giles Hawke
I won’t be making any predictions about what might happen in the general election and what outcomes we can expect. Nor will I be talking about my preference for what might transpire when we wake on Friday morning.
I would, however, like to predict what might happen in peaks for the travel industry and how agents and operators can help make this prediction come true.
With the value of the pound today, people are generally getting used to more expensive overseas holidays, both at time of purchase and while they are away. They are also getting used to higher prices at home, given the amount we have to import for our everyday lives. I went to the pub the other evening while waiting for one of my sons’ rugby training to conclude and paid £6.40 for a pint and a bag of crisps! In comparison, €3 for a demi beer in a French ski resort feels pretty reasonable.
The pound will rise
When we get a bit more certainty about our economy we will likely see the value of the pound rise against other currencies, which will make the buying of holiday components better value. The key then will be how to encourage consumers to continue to pay the higher prices so that we can start to generate reasonable profits.
When you look at industries outside of travel, the types of margins are incredible compared with some of the margins we see in our industry. We could well be accused of having undersold our products for many years in the constant search for growth and volume and this might be the time to make a change and start to sell holidays at the sort of price they should be commanding.
We may be able to use 2020 peaks as the selling period when we all make money without having to focus on cut-throat deals, which take our margin away. Holidays are viewed as an essential purchase by many and people are used to paying a higher price than a few years ago, so we know they will do so.
Margin over growth
We all need now to focus on the amazing value we offer, at these higher prices, because we are providing security and support as well as bespoke, well-managed and curated experiences.
This focus won’t work if you are just selling a hotel and a flight as there is limited extra expertise involved in creating such a simple holiday. The value exists in the more complicated and involved itineraries that only a travel professional can create, and this is where we should be maximising our earning opportunities.
So during peaks we should focus on finding customers who want and need the professional service we offer and are prepared to pay the price for these great experiences. That way we may finish peaks without significant volume growth, but with significant margin and profit growth.
We can’t control the election results, but we can control what we sell and what prices we put into the market, so we have the opportunity to make some predictions come true! This may be a hopeful prediction, but without hope, what is there?