“…For The Times They Are A-Changing…”–Bob Dylan
It is exciting times for the travel and tourism industry of the UK (and the world!). A time of change, a time when so many of our questions will stay to haunt us and a time when we can make difference. The turmoil created in the financial markets may sooner or later filter down to the core and influence the end-user of our product – the traveler. But will it and when? And if it does – is there a recipe to avoid the global destruction affecting “my company, my brand, my business…” In a profoundly weird way what is happening today reminds me of the traumas of an earthquake, when the tectonic plates adjust themselves to release pressure and allow the best and most flexible and agile of beings to flourish.
We, somehow, always tend to complicate and on occasions exaggerate the consequences and the results of socio-economic events. It is human nature to seek comfort in doom. On the other hand the mavericks amongst us thrive in these periods. Rather than destruction and fall, they see an opportunity for a great future and use it to take their businesses from strength to strength.
What can possibly happen? In sharing his thoughts on the current market situation in the UK, Richard Abraham, senior banker formerly with UBS, said, “The current financial recession differs from what the markets experienced and reflected 14 – 15 years ago.”
According to him, there are three main factors that set the downfall in motion and keep the vortex accelerating. They are globalization of the financial markets and the lack of confidence amongst the financial institutions, which leads to liquidity issues; rising operating costs (for instance fuel costs in our industry, which in some cases now amount to the largest single expenditure item); and fading consumer confidence and consequent declining consumption.
He added: “At the current moment the first two are creating the ‘scare’ and as the process develops they will change the balance between demand and supply. Today we are still experiencing higher consumer demand, but this is due to change dramatically and the industries exposed to the end-user will feel the chill most… It is not an immediate process and will take time. If I have to predict when – I will say in the early fall of 2009.”
What the travel industry is most concerned about is falling revenues on the back of limited consumer demand due to a weaker sterling pound, rising unemployment and cost of living leading to tighter consumer budgets. The UK, USA and Germany are our strongest and richest sourcing markets. The bad news is – they will be affected; the good news is – people will still be traveling.
The UK market will definitely see a slowdown after the initial boom of August this year, when the industry reported up to 150 percent increase on sales. The UK leisure traveler takes on average 4 holidays per year, alternating short and long haul. In the forthcoming seasons short haul to medium haul destinations will become dominant. Easier accessibility (or any accessibility, given the state of the airline industry) will be one of the decisive factors.
The British will discover again and fall in love with France, Spain, Italy, Belgium and Central and Eastern Europe. The bravest will venture to the exotic shores of Morocco and Tunisia. Long haul, depending on the airlines servicing the destinations, no doubt will be vulnerable and will see a temporary slow down in arrivals from the UK. Preference will be given to diversifying the product and we will see many of the niche industry segments (such as city breaks, adventure tourism, health and wellness, spa and holistic tourism, luxury trips, etc.) leading the trends. Many industry experts see an inevitable increase in domestic travel. Britons will soon discover the beauty of “home” and at least one trip within the UK will replace those taken abroad each year. Having said that, I would like to remind everybody, not to underestimate the power of the multicultural links of the British with the rest of the world – visits to friends and family abroad will be as strong as ever.
How do we deal with the future slowdown?
Like with everything else in life we have at least two options: to sit and wait and hope for the best, or to prepare actively and use the opportunity to gain momentum and a bigger market share.
Quite a few of my colleagues (more than I wish there were) in the tourism industry currently believe that keeping it “low key” and just “weathering the storm” is the right solution. They actively claim that their clientele base will loyally carry them through the time of recession. This is what I will classify as an extreme case of “putting all your eggs in one basket” – a risky and vulnerable position in which to place yourself and your company.
So, how do we deal with it? Unfortunately there is no straight answer to the question. The way we choose to deal with issues is very different and unique to everyone. However there are few basic tips that might help us all:
1. Planning – The most important part of planning is your research. I have seen many people and companies make devastating mistakes on the base of assumptions rather than implementing proper research techniques and analysis when planning. Set proper and realistic key performance indicators and benchmarks for enhanced results. Remember – nothing was created in one day. Use the same enthusiasm in planning your resources as you apply in planning your results.
2. Control your costs – Monitoring expenditure is a science the best of us have not yet mastered. One important step to improve your cost control is prioritize and leave enough time and finance to allow flexibility.
3. The Big C is back – Increase revenues by targeting the right Customer. As we are a service industry and at its best we depend on the consumer – value for money is what we should deliver today more then ever before. Many of us believe that we know our target audience and their patterns of behaviour. In times of change we should all forget what we knew and keep focused on what They, the Clients, want.
4. Market your product properly – No one likes advice on ‘How to market’ but now is the time to listen to what the marketing experts have to say! Don’t we all dread the daily calls from media and event organizers offering you cyber domination and pitching their programs, pages or shows as the essential survival tool? Isn’t it the marketing budget we look at when we need to cut costs? Don’t forget that withdrawing from the public eye at any time will have negative effect on your brand. Make your marketing program more visible, selective and targeted. Take the time and listen to other marketing experts. A good event organizer, for example, will understand your needs to address your targeted audience. The best event organizers will facilitate your message (not their message) to your audience. Choose carefully and support the media and events that will bring you closer to your targeted audience and thus directly enhance the numbers of your clientele base. Successful marketing today will help you establish a stronger brand and allow you to claim a bigger market share tomorrow.
Stanislava Blagoeva-Duschell is the exhibition director for The International Spa Show London and The Independent Adventure Travel Show UK