After some days in lockdown we have had the opportunity to reflect on our situation. The Coronavirus outbreak is generating an unprecedented economic crisis. We have been told that many jobs will be lost, that many small businesses will disappear, that the most vulnerable areas of our global community will struggle, and above all that the humanitarian crisis this generation is facing will be one that we will never forget.
Nevertheless, this situation has awoken our most basic instinct; SURVIVAL.
And it is with survival in mind that we write this blog post.
As a travel tech startup and member of the global travel community, lately we have had the chance to collaborate more so than in normal circumstances. The Arival Team has created a set of tools, resources, and initiatives that every day are encouraging travel experts to share their views, and even advise tour operators how to handle the crisis with one objective in mind: to survive the pandemic. Check out their webinars here. There have been other initiatives by many operators and experts in the industry such as Tourmaggedon, or Be a Better Guide initiative that created a virtual summit to offer some help and views of experts to handle the crisis.
But no matter the format, or the approach, most of these initiatives share the same ideas about survival; 1) Cash is king and 2) it is time to cut your costs to the minimum. One thing is certain, we can’t control the loss in revenue that comes with this crisis, but we are able to control our costs. Industry experts have also explained how to identify the costs that are a heavy burden in times of crisis, some have suggested adapting price strategies, offering discounts, not to cut on marketing and to explore cross-selling or up-selling complementary products and focus on selling to the local travel market, etc.
In a nutshell this is the economic impact COVID19 is having on the current travel industry.
|Aviation (source IATA)||Tours and Activities (source Arival)||Hotels|
|Annual loss expected to be $113- 252 billion for airline industry||The sector is valued at $254 billion 2019, consisting on 1 million operators||not enough data|
|Will go from 4% annual revenue increase to 13-30% YoY decrease (vrs. $838 billion 2019)||86% of operators generated less than $250K in sales in 2019, which implies small businesses could be hit hardest.|
|Total profit in 2019 was $26 billion or 3.1% of total revenue, which suggests even IATAs “best case scenario” for 2020 would be bearable by airlines.||Latest survey data shows 28% of operators are at risk of closing business within 3 months or 46% within 6 months. Average YoY decline in bookings is about 52% partially due to 37% cancellation of the total 2020 bookings|
Source: thanks to Plug and play tech center, who has summarized the key findings.
In one of the recent presentations the CEO of Bookingkit, offered an analysis that models three phases of the crisis, the first lock down, the second phase Fade in and a last Rebound phase; they estimate initially 30% of the market share will be reached and this will eventually climb to 85% in the rebound phase. The data suggests that domestic travel will recover faster than international travel, due to the fact that tourists will feel safer at home and that international travel will be challenged by the upcoming travel bans that will be extended to protect regions against re-infection. In dealing with COVID19, China is ahead of the rest of the world, and it has finally begun to loosen lockdown restrictions; showing 100% of sales as online bookings. However, in order to promote social distancing, Tours, Activities, and Attractions have been limited by the government to not exceed 30% of their capacity.
We all know we are in for a rough ride, but we are in it together. For now, we are uncertain about how long this will last. Many have tried predicting a timeframe when the situation comes back to normal following China’s re-opening of their travel sector. But one thing is for certain; the travel sector post-COVID-19, will never be the same.
Self Guided Tours as a tool to travel with Social Distancing
We believe we will see the rise of the Free Independent Traveler. Market data suggests that a younger generation of travelers will be the very first to demand services in the re-opening of the Travel market Post- COVID-19, this will likely drive a transformation of the behavioral consumption of travel products.
Stronger than ever before, we will see, the millenization phenomenon (refers to the idea that every generation will behave like a millenial) driving the trends in the travel industry and with it the use of self-guided digital solutions for tours and activities. This could be a perfect complement to maximize profits, cut costs, and meet the demand for the consumption of digital experiences.
Given all the above, we have begun a digital revolution in the Tours and Activities sector including our self-guided soundwalks as a part of tour operators’ portfolios so that they can upsell our Soundwalks and gain attractive margins. This will also enable them to optimize operational costs and even complement their tour guides with our technology and support approaches to social distancing that will likely continue in the future.
Overall, we believe that our role as a startup that has validated one of ways millenials want to experience self-guided audio walks i.e. with creative and immersive movie-like content. We can contribute to preparing the sector for what we think will be the new way of traveling. We know that these are rough times, and everyone is trying to implement strategies, and we are all in the same boat planning on how to “stay alive”. Together we will survive, not only because it is within our human nature, but because we have gotten together as a sector and joined our efforts to get through this crisis.
To the tour operators out there, we have a special message. Stay strong, cut your costs, look for strategies where cash will be king, but don’t be shy to reach out to the small players that have gained momentum with a new type of traveler (early adopters of digital self-guided experiences) that want to explore the world differently.
So, Let’s talk and discuss how we can help your operation to take advantage of Self Guided Tours and bring actors and 3D sound effects to your experiences.
Many thanks to all contributors to expanding knowledge and to the leaders making sure integration and collaboration is possible.
Founder and CEO of Soundwalkrs