PhoCusWright founder and serial board director Philip C. Wolf suggested travel companies should “tear up the old budgets and roadmaps, and to create new budgets, roadmaps and forecasts”, in a comprehensive webinar: “Planning for what will come, not for what was” on 2 July, 2020.
Indeed, the corona pandemic is shaking the foundations of the global tourism industry more than any previous crisis. The post Corona tourism world will be a completely new one – with tectonic shifts on the demand and supply sides that have not yet been imaginable. This was the kick off session of the new ITB Virtual Conventions, outlining “the big picture of global post corona tourism”. In the coming weeks and months, regular ITB Virtual Convention events will analyse and present the most important market trends and the most valuable practical tips for tourism providers.
Prof. Dr. Roland Conrady, Scientific Director ITB Berlin Convention, Worms University of Applied Sciences hosted the session, in which Philip Wolf said “the past is becoming an increasingly poor predictor of the future”.
The two experts discussed ways in which consumer behaviour is likely to change in relation to sustainable tourism. They examined regional differences and the impact of Covid-19 on hotel operators, airlines, and other market players.
Prof. Conrady began, “Global tourism is in its most serious crisis since WWII. In other words, for 75 years. We had been used to regular growth rates of more than 5% per annum, and the number of international tourists grew from 25 million in 1950 to 1.4bn in 2019. Like few other industries, we are now in a deep existential crisis. It is now quite clear that there will be no quick return to normality. In fact, it is becoming increasingly clear that we can expect a completely new normality.”
Wolf underlined the fact that the future could not be predicted… “Nobody could look you in the face and say when travel will come back in an unfettered and unbridled manner. So, we need to be clear about that. Right now, we are at the initial phase of a tentative recovery. I think it’s important everybody understands there are going to be a lot of miss-steps, things that are going to be tried, things that aren’t working… Plus, it’s travel, so it changes, depending on who you are and where you are and how you are travelling. Certainly, leisure travel has a lot of pent-up demand. But on business travel and global meetings, there is not the same pent-up demand. There are obvious things like travelling by ground instead of air, domestic instead of international, more rural, spacious destinations instead of urban destinations. There is a new phrase I have been hearing called ‘revenge travel’, where people were reminded about how fragile life is and what limited time we have, and they are coming back in a kind of revenge. Some people are attacking bucket lists with ferocity in planning, but the challenges are amazing.”
He added, “The romance of leisure travel that it once inspired was already starting to wear a little bit thin before the crisis. And those kinds of travellers are taking a completely different view in that ‘maybe I’ve travelled enough’, and I can focus on other things that are important in life.”
“I wouldn’t say it’s dead, but it has a permanent dent,” said Wolf, when questioned by Prof Conrady on the topic of business travel.
“The pent-up demand is not the same,” he went on. “I have lived on an airplane for 30 years, travelling 150 days a year. Do I miss that? Not like I miss visiting my children. Secondly, the crisis has had a severe economic impact on businesses, and cost-cutting is prevalent everywhere. Here’s something that’s interesting. Pre Covid-19, Zoom was averaging 10-million daily participants globally. That spiked to 300-million participants per day. And that’s just Zoom. I would ask if that number is going to go back to 10-million. Of course not. So, it’s very, very, very challenging on business travel.”
“Different regions depend on different customer groups visiting,” explained Wolf. “Europe in summer without a lot of American tourists will have a severe economic impact. This, says Wolf, may be offset by more domestic travel. In Asia, there are some very large domestic markets, such as China, which will do very well in this situation. Asia is also famous for its islands and remote locations that heavily rely on air travel – which has a big challenge.”
“Then you have these pleasant surprises like Alaska, Iceland, New Zealand or Patagonia, that are planning on leveraging their pristine environments, lack of population density, which should do very well.”
Wolf says when it comes to testing and rapid testing, there are huge differences at airports around the world. “The world operated somewhat uniformly in getting everyone to shelter at home for a long period of time, but there is no uniformity at all at airports in terms of testing.”
Wolf says the travel industry needs to “step it up a little bit”, coordinating across borders on safety issues – particularly with rapid testing. “Countries and destinations and regions that do rapid testing well will see huge benefits.”
The PhoCusWright founder warned against using the past to benchmark the future, quoting the business consultant Peter Drucker in saying, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”
He suggests companies should “tear up the old budgets and road maps, and to create new budgets, road maps and forecasts”, adding, “I think travel, tourism and hospitality leaders will be tested and made on their ability to manage through this crisis.”
People should, says Wolf, be working not only to manage the situation and make things safer, but to make things better. Rather than just thinking about survival, he suggests the winners of tomorrow will be thinking about how to do that. He points out that a number of travel companies were already facing challenges pre-Covid-19 and says “now is the time to address those challenges and business shortfalls”.
“In summary”, says Wolf, “If you want to do something new, you have to stop doing something old.”
With demand in many cases dropping down to zero, the aviation sector has huge challenges to deal with. Philip Wolf says the calls prior to the Covid-19 crisis for more consolidation need to be met right now, suggesting there are too many airlines today, and there were already too many operating before the crisis.
“If this is a catalyst for smart aviation consolidation, I think that would be great. I don’t think there will be a good rebound in aviation unless a vaccine is found.”
He suggested one of the key challenges is the fact air travel is all about queueing, and that a solution could be “digital queuing”, using mobile technology to replace physical queuing – a move that would require a great deal of new investment in technology.
Hospitality – the hotel of the future
Until February, the ultimate in service, says Wolf, was “high touch”, but in a few days high touch went from being the penultimate goal to being evil. Beyond health and hygiene, Wolf says he is a big believer in digital queuing, for all resort activities, such as using the pool, the restaurants, the spa, and so on. Hospitality, he says, will get great at that, and it will be considered great service. Within a few clicks, the user will be alerted to the fact it’s their turn to go, avoiding queuing, and creating extra convenience.
“We have a long way to go there, but that must happen for hospitality to work”, says Wolf, adding, “We have to figure out how to make it fun again. Now, we are not there yet; we are just opening up.”
He adds that hotels need to get a lot better at doing take-out and boxed lunches. “An overpriced box lunch, which, when you open it is not very interesting or inspiring… we have to do a lot better than that.”
Wolf sees the roadmap for hospitality, while the challenges are huge, being much simpler than the one for aviation.
How disruptive is the shift towards digital?
“Coronavirus is a digital catalyst”, insists Wolf. “It is not just pushing us down a temporary path. It’s pulling us down the future path. Companies have to stop throwing bodies at processes and get them automated… especially post-sales processes. Cancellations, exchanges, refunds… there was no call centre or contact centre or Twitter or Messenger centre that was remotely capable of handling all these requests. They all must be done in an automated way.”
Wolf cites the CEO of India’s biggest OTA, MakeMyTrip, Deep Kalra, who talks about “Raising the bar in self-service, bringing it up to the same level as a company’s sales efforts. If you are an organisation in travel and the way you handle sales and prospects is better than the way you handle exchanges and refunds… if they don’t get on parody… you will not be a winner.”
Wolf closed with a quote from Microsoft CEO, Sachan Nadella: “Coronavirus? How could I explain it? Two years of digital transformation in two months,” adding, “If you don’t go down this automation / digital transformation path, even if you are small in your own way, you will not be a winner.”
The interview is available online at https://www.itb.com/VirtualConvention/
Further industry news are available on itb.com under News: http://industrynewsitb.kinsta.cloud/