TourHound chairman Laurence Hicks shares his view of the current situation and what lays ahead
When information first started seeping out of China about coronavirus, I’m pretty sure none of us imagined the full scale that this unknown virus would reach, yet alone how it would impact the world’s economies and our businesses.
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Who would have thought in January, when we were all busy selling holidays, tours, flights, cruises and late getaways, that within weeks the world would grind to a halt and that the businesses we’ve worked so hard to build would, to all intents and purposes, have to be moth-balled and all movement in our communities restricted to essential journeys.
We’ve learned new terms in our vocabulary, like “furloughed”, “social distancing” and “curve flattening”, (something I’ve been trying to achieve personally for decades unsuccessfully). If I had a pound for every time the word “unprecedented” was used, I’d be a millionaire. But unprecedented is exactly the correct adjective to describe the situation we are in and while we theorise and speculate where and when this will end, the harsh reality is that no one actually knows.
We find ourselves in the very uncomfortable position of uncertainty about anything. When it comes to our businesses, survival is the key priority but alas, there will be inevitable casualties throughout our once vibrant travel industry and those casualties will be airlines, hotels, incoming businesses, operators, agents, homeworkers. No sector in our industry will escape inevitable failures in an (and I use the word deliberately) unprecedented scale.
Hopefully, some of the measures put in place by the government will help some businesses to ride the storm but without knowing just how long this storm will last, it’s going to be difficult to plan just how to ride it.
The furlough scheme was widely welcomed across every industry, not least the travel sector, but we are told that the portal through which claims are to be submitted will not be live until the end of April and financial experts are telling us not to expect any money from the government until well into May. How many smaller businesses can afford to fund even furloughed staff while waiting for the golden nuggets from HMRC to drop into their bank accounts?
Anyone I speak to who has started the process of applying for a coronavirus Interruption Loan will tell you that these loans are not going to fall into our laps easily and banks are making people jump hurdles to navigate along the track to obtaining finance that falls under this scheme.
After witnessing our commission earnings for the next three to four months all but disappear in just a few days, we spent a week carefully analysing our business needs and cash flow requirements, preparing detailed business plans and projections, together with historic and supportive information demonstrating that we were a good business and simply required cash-flow support until things turn around. Seven days after submission, we received what was obviously a template email from our allocated business manager who was “carefully considering our application” requesting all the information we had already submitted. The person had clearly not even looked at the attachments and details we spent days preparing for submission.
The other challenge many businesses are going to face is the task of collecting money owed to them by debtors of all shapes and sizes. Many businesses have simply stopped paying anyone as they prioritise their cash-flow and plan their survival. While one will appreciate the desire to ensure that your personnel are looked after, I feel that larger businesses which are stable and solvent have a responsibility to ensure that payments to smaller suppliers, which rely on seemingly small amounts of money to survive, are made.
If the flow of historic debt or commission payments is not fulfilled in a timely way, the knock-on effect to smaller businesses down the line will be catastrophic.
So now we’ve furloughed our workers, slashed all unnecessary spending, mothballed all but essential activity and potentially got our financial survival plan into place, what do we do next? There will be a continuous stream of re-bookings and refunds to sort out for sure and no doubt some admin to catch up with, but what will we be doing to ensure our longer-term survival?
My guess is that no one is going to undertake any serious travelling this side of the autumn. Not because they don’t necessarily want to but they simply won’t be able to as so many international borders that have been firmly shut will take a while before they are open again and start welcoming outsiders back into their now cautiously protected territories. The fear of a resurge in infections and reigniting the spread of coronavirus will be top of all governments’ minds.
There is also the issue of consumer confidence. As we have watched events so quickly unfold these last couple of months, I am sure that while the appetite to travel again will grow in us all, we will be much wearier about venturing across the far flung continents until we are 100% certain that it is safe to do so and without risk.
My gut feeling is that any serious travel business should not be counting on any real pick-up in movement until the autumn and that the focus of attention should be on 2021 programmes and departures. It’s going to take a while to crank up the travel economy once again and if we even see the latter part of this year reach 20% of normal levels, we will be very lucky.
We need to make 2021 the “year of travel” and our energy should be focussed on getting people moving once again from Christmas onwards. We need to also consider that people’s finances are going to be severely stretched and we need to ask ourselves whether consumers’ financial priorities will turn to holidays in the short term recovery period.
Meanwhile, with the luxury of so much time on our hands, our businesses need to be focusing on two key things: maintaining contact with our customers as these are our key assets that need to be protected, and planning for the moment we are able to confidently offer travel services again.
Many of our customers will be in some kind of lock down and you can be sure that they will probably have a bit more time on their hands. If you want them to feel special and appreciated, what better time than to keep in touch with them. Caring and empathetic communication with your database is highly appropriate right now, simply to stay on their radar. Resist hard sell sales messages as no one wants these right now but focus on their well-being, feed them aspirational material and imagery, set up a simple and fun competition evolving around travel or destinations that will engage them.
Use this precious time you have on your hands to plan and prepare for when your doors will once again be open and the phones start ringing and when your websites are again visited. You can be sure that once the starting pistol is fired, the whole world and his dog will be in the race to get that all important booking so give some thought about how you can be out in front of the race.
Be ready to fire up the staff that remain in your business as their motivation levels will need kick-starting after a period of isolation and personal challenges that they will all have faced. Incentivise them to be creative and encourage them to dig deep into their resources to help get the business up to speed again.
There will be light at the end of the tunnel, people will slowly return to travelling and venture far and wide across the world. People’s appetite to once again explore the unknown, recommence ticking their bucket list destinations, taking short breaks or simply relaxing somewhere in the sun will become a norm again, rest assured.
You need to prepare for that moment after all, if you are like me, i.e. one who has lived and breathed travel for so many years, your desire and readiness to provide your customers with that truly memorable travel experience will, now more than ever, be raring to go.