The travel industry went from overtourism to no tourism in a matter of weeks. Why are so many brands acting like they aren't in the midst of an existential challenge and period of violent change?
With the travel industry and global economy buckling under the uncertainty of the coronavirus, it has become clear that leaders across travel failed in not only mitigating the scale of the crisis but have no idea how to engage effectively with their customers.
Aggressive marketing tactics employed by the travel industry confuse and alienate consumers, limiting customer loyalty in the process. Skift calls this phenomenon hate-selling, but the pushy online behavior of these brands has a serious real-world effect.
The arcane terms and conditions travelers accept are extremely anti-consumer in nature. Usually, it amounts to a financial hit on travelers who don’t realize it costs money to switch flights or shift a hotel stay.
As the stability of the global travel sector has crumbled, and airlines have made their policies more flexible, consumers have begun to realize one thing very clearly: there is no actual reason for that $250 change fee or cancellation fee, it’s revenues-for-the-sake-of-revenues on the part of giant companies. Hotels, too, have been hesitant to allow customers to cancel or postpone their stays. Only in last few days have policies been relented, after all their systems have been overwhelmed.
Beyond the usual nickel-and-diming deployed by travel companies to boost revenue, the U.S. travel industry in particular has taken a bizarre stance to the panic gripping the world. Travel went from overtourism to no tourism in a matter of weeks and the industry leadership acts like this is just a bump in the road for their business.
More than 150 travel companies and groups signed a release earlier last week encouraging travelers to “make fact-based decisions about traveling,” the subtext being that the fake news media is misleading people on the severity of the pandemic.
“The latest expert guidance indicates that for the overwhelming majority, it’s OK to live, work, play and travel in the U.S.,” reads the statement. “By seeking and heeding the latest expert guidance—which includes vigorous use of good health practices, similar to the preventive steps recommended for the seasonal flu—America’s communities will stay strong and continue to thrive. The decision to cancel travel and events has a trickle-down effect that threatens to harm the U.S. economy, from locally owned hotels, restaurants, travel advisors and tour operators to the service and frontline employees who make up the backbone of the travel industry and the American economy.”
It’s hard to grok what the intended effect of this statement even is. People should continue to travel because they owe it to businesses? The fear being experienced by consumers is based on lies being spread on the news?
The travel sector has an important role to play in flattening the curve of infection but has so far done everything in its power to not just resist a slowdown in movement but convince travelers to conduct their lives as they normally do.
The New Normal
With an eroded Federal government in the U.S., it remains unclear whether public health officials are giving sound advice on halting the spread of the virus or the public is being manipulated for political reasons in an election year. The contrast between the actions of Federal public health officials is striking when compared to state and local leaders who have closed down schools and entire cities.
The statement serves to underscore one thing in particular: the travel industry has a strangely delusional relationship with its customers, if it is a relationship at all. The individual traveler really doesn’t matter; these companies look to drive a huge volume of bookings from travelers, in an age of big data, they see travelers as numbers and revenue instead of people. The collapse of business travel has been a crucial component to the unprecedented situation airlines and hotels now find themselves in.
In the era of Permanxiety, doubt and uncertainty have become common. The question of whether your family and community are about to be rocked by a highly infectious virus, however, represents something unprecedented in American life.
With the entire country of Italy under lockdown, the realization has dawned on many that life as usual will be interrupted by efforts to slow the spread of the coronavirus. Protecting the most vulnerable among us, whether elderly or those with existing medical conditions, is not just sound decision making by leaders but the moral thing to do in an uncertain situation.
Travel brands, though, still act like everything will magically go back to normal once this phase passes, that this viral outbreak is like a natural disaster. It is tone-deaf and insulting, though, to imply that those taking precautions to protect themselves and their families by cancelling a trip are somehow at fault for their concern.
This has become a public relations boondoggle for travel brands with frustrated customers spending hours on customer support lines only to be kicked off, lied to about refunds, or told to call back later like they don’t matter at all. This represents a huge reputation issue for legacy travel brands.
As the full extent of the coronavirus epidemic is being exposed in real time, it’s doubly surprising that more than 150 of travel’s most powerful groups couldn’t see a black swan event like this coming. They are, after all, stationed all over the world with insight into demand and habits of both travelers and locals.
Travel’s Big Problem
Why is travel, with its global footprint and deep insight into consumer habits, always slow to react appropriately during a crisis? It could be the fragmentation of the industry, perhaps, or the big business priorities created by a couple decades of consolidation.
Major airlines are adding liquidity and furloughing workers at the same time they publicly message that everything is just fine, they’re working through a problem like they usually do. Hotel chains have been quiet, mainly because they are really franchising companies that will cut costs while their franchisees fold over the next few months due to high labor costs and expensive debt payments.
Tour operators are cancelling trips through April and cruise lines are shutting down too. Even if consumer demand returns quickly, there may not be enough supply to satisfy companies desperate for profit after a few months of no business. Whatever ends up happening, the crisis portends a possible two-year downturn for travel at large after a decade of explosive growth.
The fear is real and consumers are spending less. We’re probably about to see a recession in the States based on the collapse of spending by U.S. consumers. It’s easy to make the choice between a roll of toilet paper and a trip to Rome when so much uncertainty has been unleashed. Those in Europe about to be locked down may not be so keen for that weekend trip to Barcelona this summer when they can’t afford rent. The Chinese consumer who has helped supercharge the travel industry in recent years, too, will be less apt to splurge on that world tour. Government revenue and local economies will buckle as a result of decreased traveler spending and tax income.
With the airline sector in free-fall, particularly in Europe, much will be made of the nervy confidence the industry projected over the last few years and the speed at which it all fell apart. This doesn’t bode well for the financial future of the airlines and will almost certainly touch off another wave of consolidation in the sector. Beyond that, connectivity will be reduced around the world on less lucrative routes.
Given the timing of China’s reopening to the world, the U.S. travel industry can expect at least three months of disruption, eviscerating the lucrative summer travel season in the process. The knock-on effects of reduced demand will continue for some time after.
Which Master Do We Serve
The optimistic take is that travel has grown so quickly since the Great Recession that when this crisis ends, it will be well-positioned to start growing again. The baseline is higher than ever before, the juicy pie bigger and ready to be sliced anew.
A more pessimistic view is that big companies will shudder and collapse because of their size and inflexibility, leading to a protracted slowdown and the emergence of upstarts who upend the status quo.
The biggest players in travel, with large head counts and huge overhead, are most threatened right now.
It’s time for travel to adapt to the reality of this moment: the good times are over and it will probably be years before things return to normal, if they ever do. In an existential crisis, travel brands would be wise to remember who they really serve: the traveling public.
Photo credit: FILE - In this Friday, Feb. 28, 2020 file photo, two waiters wait for customers in a restaurant at St. Mark's Square in Venice, Italy. With the coronavirus emergency deepening in Europe, Italy, a focal point in the contagion, risks falling back into recession as foreign tourists are spooked from visiting its cultural treasures and the global market shrinks for prized artisanal products, from fashion to design. Claudio Furlan / Lapresse via AP