Over the last few weeks, I have been in the fortunate position to be able to speak with many tour operators about how they’re coping with the current coronavirus (COVID) crisis, opening up my diary as much as I possibly can. While I’m privileged to be speaking with so many people in the industry, I’m losing my voice due to the number of discussions and webinars I’ve been part of recently. Needless to say, the worry and stress most operators are going through right now is unprecedented. A lot are frightened about how, and if, they will survive in the now never mind surviving past this crisis.
Relying on OTAs
One running theme I’ve quickly noticed is that operators and activity providers that have a heavy focus on OTAs are more at risk than those who have a strong direct revenue channel. It doesn’t matter if you only utilise one OTA or many, as we are all in the same situation: no one is making any bookings right now.
Before I continue, OTAs only account for about 10% of the tour and activity market, and this is not an article that is here to berate OTAs. Although I have strong opinions about how they conduct their business at times, they can be used to a company’s advantage if approached in the right way. This article is aimed at those providers whose business relies 60%-100% on online travel agents… and there are many.
The issue with the businesses I’ve spoken to that are heavily reliant on OTAs is that they almost have no business. They are a passenger, an ‘employee’ of these organisations which means they have no rights in how that ‘employer’ conducts its business. No say in commission rates, no say in what they put in their cancellation policies and, more importantly, no right to their customers’ data. That data is what is vitally important to a business surviving during any crisis, but especially a crisis as unprecedented as COVID-19. Only World War 3 would be more devastating to the world’s businesses and economy… this is how serious this situation is.
Many are unable to contact the customers they serve, to persuade them to postpone and/or offer super flexible terms and cancellation policies – to do what it takes to make sure they have every possible chance of survival. Now, this is not to say that those who have strong direct channels are immune, but they have a better chance of survival than those who do not.
The explicit advice I offer those operators is to switch your focus to direct channels so that you have a stronger business in the future.
Creating a stronger business
It’s perhaps not time to focus on the next crisis, but what this pandemic has taught us as an industry is how quickly everything can change. Another crisis will hit us all again at some point, whether it’s the coronavirus coming back, another recession, a volcanic eruption, a terrorist attack or something unforeseen; you must set up your business differently going forward and have a crisis management plan in place.
If you are in this position, or you are having to restart your business again, please make sure you focus on direct bookings. I understand that OTAs are a great way to get your products out to a larger audience, allowing you to generate revenue quickly, which is fine for the short term but do not leave it there. The danger of becoming solely reliant on OTAs is that it becomes easy to fall into the trap of being comfortable with the situation as you see money coming in and life seems good.
Going forward, I implore any tour and activity business reading this to re-enforce their direct channels. Now is the prime time to be focusing on how your website looks and functions, how you are marketing your business and setting plans in motion to protect and grow your business and the livelihoods of your staff and yourself. Make sure no more than 20% of your sales are generated through OTAs, with the remaining 80% coming from direct sources.
What should you be doing right now?
Anyone who claims they know exactly what they’re doing right now mustn’t understand the reality of the situation we’re in as an industry. No one can predict the future in this crisis, but I’d like to think that my experience and contacts throughout the industry allow me to offer some well-informed best practices. Right now, you should be marketing your business organically, through good written and video content, providing inspiring stories that humanise your brand and keep your brand in your potential customers’ minds.
Why? People are self-isolating or they’ve had their travel plans cancelled due to travel bans. Some people will be depressed and eager to get out and travel once the coronavirus has been contained.
They are spending more time at home, on their laptops and smartphones, fantasising about traveling. So give them something to read or a video to watch. Inspire them, entertain them, and give them useful content that helps them plan their big post-crisis trip.
Now is the right time to plant the seed as your customers’ ‘dreaming stage’ will now last at least 3–6 months. You can see various ideas of how to market your business during this time in my Coronavirus Battle Plan or in my book Lookers into Bookers, which I made free to download to help the industry. My Battle Plan alone has been downloaded by close to 10,000 individuals.
Utilise the ‘free time’ you and your tour guides currently have to create and publish this content on a regular basis. It does not need to be perfect; it just needs to happen.
I understand that many of your guides and staff may now be unemployed with the hope of returning to employment with your company in the near future (I really hope so!). If your staff have any sense of loyalty, they will help in any way they can to ensure your business’s survival with the hope that they still have a job at the end of it. If nothing, it helps weed out those employees who could not care less. Harsh, but that’s the reality.
My own team at the Tourism Marketing Agency have been incredible — working their proverbial arses off not only to give the operators we help peace of mind that we will do anything to help them through this crisis. But they’ve also been helping me get out all the free guides and materials we’ve produced recently. Your staff should be doing likewise.
Conclusion: Direct bookings = direct control over your business
Direct bookings matter. This is because direct communications with your customers matter now more than ever. These direct relationships give you a better chance of changing cancellations to postponements, a better chance of creating more flexible payment terms and policies that work for your business and not just for an OTA or other entity who has too much control over your business.
Rely on OTAs to the point that if they switched off tomorrow, you would still have a business. This will create a stronger foundation for you, your staff, and your customers.
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Chris and his team will send you a weekly email offering high-value insight and advice about a variety of marketing and business development topics related to the tourism industry. We address specific destinations, tours and activities, and the hotel industry. We also provide important travel industry news and updates.
