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Disaster is just an opportunity in hiding.

Disaster is just an opportunity in hiding.

Ok, this is the article I wish I did not have to write, but we are where we are so hopefully it will help a few tourism businesses. As always my focus is on the fast-growing global tours and activity industry but this will apply to all businesses involved in travel and tourism. I do not want to add to the media hype, however, if you are in any part of the travel business if you have not been impacted you will be. You have work to do!

Any mistakes in this I blame the combination of currywurst and pommes frites, beer and a rowdy Berlin bar.

I have always been hugely grateful for my military background. Although it was a long time ago the tough lessons are still called upon on a regular basis. The British military spends a lot of its time trying to turn disasters into opportunities. In order to do so, it always has to create a stable defensive position. This article will try and help tour operators to create that position and hopefully motivate some to progress from there and grab the coming opportunities.

I am not going to discuss the virus, it is what it is and what to do about it is way above my abilities and at these critical times, everyone needs to focus on what they can impact not what they cannot. As I have mentioned many times before speed in the digital era is a strategic advantage and I urge all operators to address this issue rapidly. However, do not panic this is a time for cool heads.

Assess where you are and make assumptions that it is going to get worse

Before you start to take actions you need to do a quick assessment of your business and the current impacts and the likely impacts. As always with everything, do start with your customer in mind. Who are the? Where do they come from? How do they get to us? How many cancellations have we already had versus this period next year? What is our search traffic compared with the period last year? What are our customers saying to us? What are the other parts of the travel industry reporting especially the airlines?

Get a complete honest holistic position of where you currently are and where your destination or destinations are both the ones you operate in and the ones that feed you, customers. Even if at this stage you are not seeing much damage put yourself in the position of a northern Italy operator as you could wake up tomorrow and be in the same position.

Internal Assessment

You need to do an assessment of your finance, operations, HR, communications and marketing.

You will have noticed finance came first. Obviously every operator will be in a different financial position however all will need to do the basics.

Double down on anything that is currently generating cash and bank it. Cut back on non-essential projects and nice to have things. Protect the core of the business and try and create a financial plan that keeps the business alive with a vastly reduced cashflow.

Honesty

You need to be honest with yourself at this stage. As travel business owners we all tend to be the most optimistic people on earth. This is a time for brutal honesty with yourself, your staff and critically your customers. At this stage in many destinations, the message is going to be very positive and you need to be positive to help your customers. In destinations where the situation is not so good, you have to be honest with everyone and let them make their own decisions.

Operations

Now is not the time to have competitors. You competitors are your friends. Get meetings with other operators in your destination and figure out how you can work together to continue to deliver services to customers but share back end costs. This helps everyone and damages no one. Unless they are sitting on massive cash reserves they will listen.

Make sure everyone in your destination involved in tourism are all singing from the same song sheet. Work together like never before. Try and get a single voice message not just from your own company but from your destination.

Look at your range of products and make decisions about should you keep running them all our should you cut back on some and focus on some core ones. Again in our super fragmented industry, this is operator by operator decision.

Locations. Do you have multiple back-office locations that all come with costs? With the technology, we have today this may be the time to consolidate these different office locations.

Assets. What large assets do you have that will eat cash if not being used. Buses, hostels, boats etc. You need a plan for each of these.

I hope by now you all fully understand your fixed and variable costs in your business. Now is a time to have as many variable costs as you can and as few fixed costs as you can. It can be an eye-opener to see what you can find that you normally consider fixed but can be turned into a variable cost.

Prices

We have been spending a lot of time talking about pricing recently and I am sure it would have been the top topic if the recent travel conferences had gone ahead. My opinion is as an industry we have underpriced what we do for years. Now is not the time to make that situation worse. Do not go into a discount war. Just do not do it. Maintain your prices and if your customer numbers are dropping put your prices up. Or add extra value into your experiences.

Make sure you know your unit economics inside out. This is a time to maximise the profit you make from the tours that you do continue to run. It is not a time to be chasing volume that comes with dodgy profit levels.

Your People

You are in the experiences industry. Your people and guides are the only real strategic asset that you have in the digital era. Protect them as much as you can. I know tough decisions will be forced for many but we are nothing without good people.

Communication

It is critical you communicate with a single voice from your company, destination and hopefully from your national tourism organisations. Keep everyone updated on a regular basis. If you do not have any incidents of the virus tell everyone you do not. You need to have a prevention policy for guests who are at your locations. Hand wash facilities etc

Marketing

After the full holistic assessment, you made you will be able to decide where and how you continue to market. You notice I said continue! Do not stop marketing. However, it is exceedingly likely you will have to change how you market. As a personal example, I have cut back my marketing for trips to Asia to a drip-feed awareness only and I am not running any campaigns on that destination with the aim of converting. However, in my other business, I increased the marketing spend back in January as a counterbalance because I deemed it would be less impacted in the short term. We had a booked revenue growth in Jan of 56% and in February of 105% on 2019.

See if you can move marketing to focus on guests who are closest to you. People will continue to travel and do experiences but they will go shorter distances. If you do not have a local market see if you can create one. I know not all operators can do this, it is pretty hard to sell a local Italian on a pizza making experience but if you do have any local market at all double down on it.

I will be pushing my own marketing to local markets of Scotland, England and our European near neighbour friends. The context will be around wild open spaces and not a lot of people. Living life to the full and enjoying those adventures you had always wanted to do but had put off. Obviously this is a plan for this week and next, you have to stay nimble enough to change direction at short notice.

So if at all possible do not reduce your marketing spend but 100% make sure it is altered to suit your new situation. Think about Brand marketing. Not something many small operators do much off but now may be the time to start. Think about all that long painful SEO work that you never get around to. Now is a perfect time and it will pay back for years after when this is over. I am willing to bet many will cut marketing so the law of numbers tells us that someone else will get an increased share of attention and be in a better position down the line. That is the first hint of " opportunity" but more about that later.

If you have a long sales cycle this is a period when you can bank all the potential leads if they are not converting at present so when things change you can explode back into action with warm leads.

I really hope everyone manages to get their business into a position that they can manage to survive through these challenging times. It is time to help each other like never before. Good news is in the post it just has not been delivered yet.

The Opportunities

Okay, all crises and situations of chaos present opportunities. I know this may seem brutal but the reality is we are in business and business has rules and this situation is going kill some businesses and massively weaken others. That means no matter what part of the travel industry you are in if you can keep your head and see past the end of the impact you should already be coming up with a strategy and action list on how you can develop your business post this event. I believe the opportunities are going to be massive for those able to execute on them.

A personal example. The 2008 Financial crash trashed my corporate business overnight. It represented over 50% of my yearly profits. In 2009 I purchased another operator and opened a new operation in a different destination. Both of which would have cost significantly more pre-crash.

So in completely random order, the opportunities include. The stuff in italics is an update on 3rd April 1 month after I did this article. It is based on over 70 hrs of 121 video calls with tour operators from small guide only operations to companies doing up to $10m and tends of thousands of guests.

  1. Gaining market share. This is now a given for those that survive as so many are not going to. The failure rate is going to be huge.
  2. Merging opportunities. One month on the is now an exceedingly serious option 2 or 3 city tour operators are probably only going to have the volume in the medium term to let one survive. Get speaking now. If you cannot survive and a merge is not an option consider pulling the plug early rather than later.
  3. Acquisition opportunities at fantastic values. For those with cash in the bank, you will never ever get these opportunities again
  4. Time, you may have more of it than you planned so use it wisely. All those things you meant to get round to but never did. If they are going to make your business better and if your core is safe now may be the time to get them done. After all, the must-do rescue tasks the number one thing you can invest your time in now is SEO and content production for the future.
  5. New destinations that the market may deem safer than others. This is critical for marketing which will have to be laser-focused
  6. Increased profits because some of the actions you were forced to action resulted in your business being more efficient. This will be profit per tour or per transaction not per company as the volume is going to be down
  7. New partnerships. Other organisations may be more open to a partnership than they were before. Everybody is in the same boat everyone looking for new opportunities partnerships are a life raft
  8. Talent. The odds are there is going to be a lot of talented people looking for new roles. Much more and more quickly than I anticipated
  9. If you deal with this situation with strong leadership and effective management of your business and yourself your business will be much stronger after this is over. Which will come in handy as the next disaster will happen at some point? If the travel industry was easy it would not be half as much fun! Any business that survives this is by default going to have much stronger leadership and management and skill base
  10. This is a new addition. Lots of Gov funding being offered in different countries. Take what you can get but if it is debt be careful. Can you pay it back with a forecast of 50% less volume?
  11. Innovation. Can you take your core of the business and change it to help with the current situation. Food businesses come to mind. Cycle business comes to mind.
  12. Every single operator I have spoken to has described a wish to be more direct with the market and less reliant on marketplaces. If you are going to survive you know have the time to do something about that.

The above is just a very short list of some of the things that operators need to be considering and acting on. Your list is going to be much longer. My intention was just to hopefully kickstart anyone who is still wondering what they should do.

I wish everyone well and here in Berlin, the attitudes of operators and the willingness to make the most of a difficult situation and help each other have been an example that I was proud to witness.

Regards

Pete

UPDATES. 4 March. I will add anything I think will help operators below. If you read anything that you think will help travel and tourism businesses or any resources that are practical help send me it and I will add.

Podcast Chat on the same subject

https://tourpreneur.com/tour-operators-coronavirus/

This is the most accurate detail daily updated detail of the spread I can find

https://mobiledossier.microstrategy.com/MicroStrategyLibrary/app/EC70648611E7A2F962E90080EFD58751/DB86B39811EA4DC763E20080EF55B0C0/K53--K46

Some legal knowledge that may help http://www.macdonaldhenderson.co.uk/news/story.php?newsID=600

Some expert marketing advice from Chris at the Tourism Marketing Agency

https://www.linkedin.com/pulse/marketing-against-effects-coronavirus-chris-torres/

https://www.who.int/emergencies/diseases/novel-coronavirus-2019/travel-advice

https://skift.com/coronavirus-and-travel/

Maybe some positives for some operators

https://skift.com/2020/03/05/uk-staycations-may-be-a-rare-beneficiary-of-coronavirus/

6th March

https://str.com/data-insights-blog/coronavirus-hotel-industry-data-news

https://www.trekksoft.com/en/blog/managing-cancellations-and-refunds-for-tours-and-activities

10th March

This does not make good reading for the travel industry

https://www.mckinsey.com/~/media/mckinsey/business%20functions/risk/our%20insights/covid%2019%20implications%20for%20business/covid%2019%20march%209/covid-19-facts-and-insights-march-9-final.ashx

18th March

Well, what a week that has been. Do not want to experience that again but I know I am going to this week and so are all you tour operators and tourism friends out there. Stay strong and stay cool and work through it. The website below is for help from a few of us older Industry been round the block types. You can also book 1 hrs free consultations with me at https://calendly.com/peter-syme-1000-mile-journeys/help-operators-2020?month=2020-03 all March full but slots in April

https://www.tourmageddon.com/

UK Gov Help or is it?

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

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