Still, regardless of when a downturn hits or its significance, the sheer volume of growth within the industry alone means travel executives will need resilient portfolios. Consider that higher supply like the development of hotel rooms or cruise ships—which continues to rise to keep up with demand—is contingent on consumer spending. In the case of hotel rooms, more rooms help cover the cost of the real estate investment during a booming economy. In a downturn, that strategy becomes difficult to manage. For the hotel and resort industry, development remains strong with nearly 6,000 construction projects in 2019 alone and another 4,000 expected to start in the next 12 months.
The situation gets even more complex when factoring in rising labor costs. Wages further hamper the ability for a company to react because those costs have also significantly increased.
Four ways to build resilience now
Given the shifting dynamics and the pace of today’s modern environment, it is no longer about strategizing for the future but taking action to ensure viability. It is now time for travel executives to proactively arm their business and portfolios with resiliency that thrives in an economic downturn.
1. Accelerate direct booking via next-generation loyalty.
Enabling a direct relationship with customers is one area legacy travel and hospitality brands can’t afford to ignore.
For the modern traveler, the first stop while planning and booking is often an online travel agency (OTA), marketplace (e.g., Airbnb), metasearch (e.g., TripAdvisor) or simply a Google search. When guests choose this route, not only can it limit profits but it also hampers the ability to interact and provide value-added services throughout the journey.
Many travel executives today believe customer loyalty is about the strength of a loyalty program. As a result, many lose sight of the customer relationship. Winning back direct customer relationships starts with reducing friction at every digital touchpoint. That means creating a mobile-first digital experience that enables a modern retail commerce capability. This approach leverages capabilities such as flexible search and shopping cart functionalities, as well as personalization capabilities such as recommendation engines or dynamic offers.
In addition, the mobile app experience must be seamless and relevant. Recently, 69 percent of hotel executives said they were not confident in their organization’s ability to deliver mobile experiences that improve guest experiences and loyalty. App enhancements, as enabled by third-party technology, also build upon the guest experience. For example, CarTrawler’s software development kit enables airlines to offer pre-booked or on-demand transportation from Lyft, Cabify, Gett, Careem, MyTaxi, Grab and others to help own more of the “first and last mile.” Features like these and others, such as offering local activities and tour packages, will be differentiators. Already more than one third of U.S. tours, activities and attractions bookings are made through a mobile device, according to Phocuswright.
Executives will need to rely on personal profile data (from both first and third-party data sources) in real time to provide customers with offers, incentives, content and in-venue experiences that help forge meaningful, ongoing digital and personal relationships with the customers.