Time to seize the opportunity for change, arguesJonathan Sullivan of Accenture
The travel industry has been one of the sectors hardest hit by the coronavirus pandemic and the road ahead still looks winding and uncertain.
But demand is there. The sector is no stranger to disruption and there is an opportunity for the industry which emerges to be one that is more profitable and sustainable over the longer term.
In the UK, the ongoing changes to the traffic light system have been met with negative responses, but that is the reality. Companies should be looking for ways to adapt to a far more volatile world rather than pining for the relative stability of the last 10 years.
Covid isn’t going to disappear anytime soon and will cause changes in both rules and demand. Put simply, while we are on a steep improvement path, things will be different to pre-pandemic travel and companies will need to operate differently.
Companies need to manage what they can control and think through re-tooling their businesses to perform better amid rapidly changing demand environments, however these may be caused.
The future success stories will be the companies designed to flex with demand and gracefully respond to the added complexities and volatility in travel by delivering a ‘travel partner’ mentality to customers.
That may be through fast deployment of capacity when markets open or fast customer-friendly digital service when danger arises. Success requires a new deftness.
The first key is re-constructing the business model so that it stands firm when deployed capacity is far less than available capacity.
The core of the business – traditional transportation and cargo for airlines and the room product for hotels – should be designed to be cash flow positive when deployed at half capacity or less.
Travel companies need to sell more services to their customers too. The associated service offering around the core product should be expanded to drive higher margins with lower fixed costs.
That could be as simple as rethinking the mini-bar proposition and room service delivery model in hotels and as complicated as selling and managing fulfilment of destination services provided by third parties.
Rethinking the employee and colleague proposition is the second key.
Building more adaptable and flexible travel companies will require re-defining relationships and expectations between the company and its extended workforce – both employees and service partners.
In the short-term, both the company and its workforce will require more flexibility. For example, how will a hotel front-of-house staff member who is a single parent manage when their child’s class is told to quarantine at home?
Long-term career paths will undoubtedly change as the nature of work in travel companies continues its digital evolution. Airlines and hotels have a responsibility to think through how they can make the proposition of work in the sector appealing.
Customer care is the third key. Travellers need help navigating the protocols required to enter countries and want simple, intuitive, rapid self-servicing when conditions change.
This could include organising customers’ health compliance details, such as pre-travel health assessments and compliance with country entry rules, in one app.
Customer care also extends to the full product construction, for example pricing and contractual terms could be designed for easier digital self-servicing.
Technology plays a part in forging these three keys. The travel industry is one of the few industries that supports global operations with 24/7 availability. It is full of outdated technologies that are stable, but limit progress and improvement.
Strategic technology decisions are often made ad-hoc and on a pure cost basis for existing capabilities, rather than based on insight of how the business needs to transform.
As the impacts of Covid subside and demand picks up, travel businesses need creative pragmatism in bringing together technology and ingenuity to be in the best position to build profits and recover faster, as well as keep up with customer expectations.
Travel companies are likely to feel battered and bruised, but now is the time to re-introduce your brands to customers. This is a pivotal moment for businesses to seize opportunity from change.
Jonathan Sullivan is managing director of the Accenture travel industry group