Right-Direction-Travel-Transportation-Hospitality

Steps in the Right Direction for Travel, Transportation and Hospitality

If your business centers on getting people and merchandise from one place to another, what’s your worst nightmare? Governments all over the world needing to tell people all at the same time to stay home indefinitely due to the pandemic. No wonder executives in the Travel, Transportation, and Hospitality (TTH) industry are having many sleepless nights.

In the recent 1Q20 ISG Index™ call, I described in detail some of the industry’s pain caused by the COVID-19 pandemic and some potential remedies.

All the major cruise lines, known for attracting international passengers and crew members, have shut down for at least the next couple of months. The Canadian government also has closed its ports to all ships carrying more than 500 people.

The U.S., E.U. and Canada are among the countries closing their borders to all but their own citizens, which put the kibosh on international air travel. And once governments worldwide issued the much-needed stay-at-home orders, domestic air travel dried up, too.

As a result, hotels sat empty. Small and midsize travel agencies went belly up, stranding some customers. Conscious of dwindling cash-on-hand, some companies cancelled planned upgrade projects. Furloughs and layoffs across the TTH industry dumped hundreds of thousands of people, many of them modestly paid, onto unemployment lines. Many business owners in the industry also worried that their hourly workers may not all return once the pandemic subsides. Would those workers instead choose an industry less vulnerable to the impact of a potential future wave of the virus?

Some sectors of the industry did see some uptick. Rental cars temporarily picked up some new business from college students scrambling to pack up and go home once classes switched to online-only and dorms closed after spring break. Private jets booked new clients who wanted to avoid the risk of commercial airline flights. Demand significantly jumped in rail, shipping, logistics and trucking due to a decrease in aircraft belly cargo options and an exponential increase in online shopping and home-delivery volume.

What and how should we talk about recovery? What do customers need and what support is intrinsic to the industry or newly available from governments?

Do not forget the pandemic hit during a very strong economy, so there is money to lend to businesses struggling to meet their payroll without revenue coming in from new bookings. The $2.2 trillion aid package approved in the U.S. will forgive some loans if the money is used to keep workers on staff and pay suppliers and mortgage or rent while stay-at-home orders are in effect.

Also, companies in the TTH industry typically have extensive loyalty programs. They know a lot about their customers and have some leverage to smooth over disgruntlement and keep in touch. Already you might have noticed businesses lifting the expiration date of rewards points and loyalty status tiers.  

Demand has surged for contact centers, too, as customers rebook or request refunds. Many call centers not only met unprecedented demand but did so while transitioning to work-from-home setups. This pushed businesses to quickly seek innovative ways of communicating with customers.

Customers worry about cybersecurity in the best of times. Any sort of chaos increases the opportunity for predators to take advantage of distracted IT staff by hacking into databases. Businesses want to make sure all their assets, physical and digital, are solidly protected.

TTH companies need to start thinking now about how to protect against a future pandemic, beyond swabbing down their physical assets with disinfectant. Many may explore digital labor options, relying as much as possible on bots that never get sick. An increase in digital labor may manifest itself as there is a greater emphasis on e-commerce, including personalized, streamlined booking, check-in and checkout through apps and mobile devices. With the profusion of geo-mobility devices and wearables that track and provide any data, anytime, on any device, companies can leverage predictive analytics and find ways to further monetize customer data.

Competition to attract customers will intensify, and new disruptors may become more relentless. Along with that, we may see more M&A activity. Businesses also may be more willing to work with niche players who can swiftly infuse innovation and ideation into their ecosystem. Service providers and partners who can do things that can substantively make an impact to the bottom line will be sought after first.

Here’s our prescription to help TTH industry businesses recover from the pandemic:

  1. Stay connected with customers and personalize their user experience;
  2. Draw customers back by introducing new and innovative services;
  3. Stand out in the marketplace by optimizing and modernizing assets, infrastructure, apps, and processes; and
  4. Keep customer data secure, and retain your customers’ trust by fully complying with all government and industry-driven regulations.

As the population returns to good health, so will our economy. ISG is helping travel, transportation and hospitality companies get through the current crisis and position themselves for growth in the months and years to come. Contact us to find out how we can help you.

About the author

John Westfield is a senior IT services industry executive with more than 30 years of expertise in commercial ITO/BPO sourcing, service delivery and operations across Fortune 500 industries and markets. He leverages his sound consulting experience to quickly learn and adapt to his client’s unique environment to achieve the desired objectives of an engagement.