It’s going to be a rough couple of months for the travel industry, there’s no doubt about it. But not all is lost. With a cool head, a bit of flexibility, lots of empathy, and some creative thinking, hospitality marketers have the opportunity to minimize the effect of Covid-19 on their business.
We’ve all heard of Covid-19. What started as a small outbreak in a Wuhanese food market (we think), has come to dominate daily life. We’re confronted with a constant stream of updates, from the latest infection and death toll projections to the most recent event cancellations and travel bans. This goes beyond our screens; conversations with family, friends, and colleagues are dominated by discussions of plans interrupted, the realities of quarantine, and the availability of toilet paper.
Attitudes towards Travel are Changing
It’s no surprise, then, that people are thinking twice when it comes to travel. In fact, a USA Today/Ipsos poll surveying 1,005 US adults reported that 50% of respondents said they would not travel on a plane. When looking at those over the age of 55, this percentage increased to 58%. Cruise travel fared even worse, with 80% of respondents stating that they would not currently travel on a cruise.
While the sample size of this survey is quite small, the attitudinal shift that it points to is strongly reflected in recent announcements by industry heavy-hitters. Hilton, United Airlines and Royal Caribbean have all taken on additional loans or extended credit lines. Princess Cruises has cancelled all voyages for the next 60 days while Disney has temporarily closed all of its parks and suspended its cruise line.
Governments are Taking Notice
The effect of Covid-19 goes beyond an individual’s travel decisions and even company performance. For many countries, the travel industry represents a significant portion of GDP and a key source of employment. This is especially true for those countries currently most affected by Covid-19 (by the number of cases). In 2019, the average contribution of the tourism industry to the GDP of these countries was 9.2%, while it accounted for an average of 10.5% of jobs (both directly and indirectly). The below tables provide a breakdown by country.
Source: World Travel & Tourism Council
Source: World Travel & Tourism Council
Consequently, governments are taking notice of recent events. The French government has already stated that it is willing to use all means available to support Air France. Meanwhile, in a bid to soften the blow on the US travel industry, the Trump Administration is considering deferring taxes for cruise, airline and hotel industries.
It’s Going To Get Worse Before It Gets Better. But, It Will Get Better
We’re in the business of luxury travel, and have been for more than 15 years. To be honest, we haven’t seen anything like this. As our Principal Stephen Saugestad wrote:
“We are on the front lines of what is likely to be a significant downturn, and travel is the canary in the coal mine. The airlines will be impacted the most, but hotels and F&B businesses are not far behind. Covid-19 has already caused serious disruptions to the travel business. It’ll get much worse before it gets better.”
However, I want to stress that our intention is not to perpetuate the doom and gloom of the current news cycle, but rather to stress that Covid-19 is more than just a blip on the radar. It will go away, but in the meantime, we need to define a comprehensive approach to this uncertainty. With a cool head, a bit of flexibility, lots of empathy, and some creative thinking, we have the opportunity to minimize the effect of Covid-19 on our businesses, the industry, and the global economy as a whole.
Stay the Course with Your Marketing
History has demonstrated that in times such as these, businesses will focus on one of two approaches: cost-constraining or revenue-enhancing. These two approaches are not necessarily mutually exclusive; each can be applied across different aspects of a business.
While marketing often falls under the cost-constraining approach in times of uncertainty, it should sit firmly under the revenue-enhancing approach. Studies have shown that willingness to stay on course on marketing expenses and activities can help businesses minimize negative impacts.
A 2015 study of 1,581 US hotels during the 2008/2009 recession categorized properties as “Winners” and “Losers” based on financial performance. On average, Winners spent $11.50 per available room on total marketing expenditures, while Losers spent an average of $6.10 per available room.
What’s more, analysis of the 2003 SARS outbreak points to marketing as a key component of a hotel’s ability to weather uncertainty. “The hotels that recovered sooner were the more entrepreneurial and creative in finding new business opportunities during the hard times.”
That’s Great, But What Can I Specifically Do?
There are a number of tactics marketers can employ to try and mitigate the impact of Covid-19. Underscoring each of these tactics are our four key values: Calmness, Flexibility, Empathy, and Creativity.
Take Control of the Message
While people may not be booking, they are certainly still searching. We’ve noticed this across a number of the properties we work with; the year-over-year decrease in revenue is disproportionate with the decrease in sessions and organic sessions. Looking at a sample of 30 properties roughly distributed over North America, Europe, and Asia, we see a 68.2% decrease in revenue, but only a 9.3% decrease in sessions (March 1-12, 2020 vs March 1-12, 2019).
Consequently, it’s more important than ever to ensure that you are firmly in control of your brand’s narrative. This means not only guarding against negative brand associations, but also communicating in an open and honest way with all stakeholders.
- Reassure Your Staff: They are at the front line of your operations and represent your brand to your guests. Share your prevention plan* with staff and give them the tools they need to communicate preventative measures to guests in a brand-compliant manner. Anxious staff will very likely result in anxious guests.
- Reassure Guests: Pre-empt cancellations by sharing the preventative measures that you are taking. Email is a great tool for this. Make sure to provide contact information so that recipients can easily reach out to your team to ask any additional questions. This contact information should direct to a real staff member, and not an automated system.
- Reassure Potential Guests: As mentioned above, people are still researching travel. When a user lands on your site, don’t give them any reason to leave. Indicating that your brand is aware of the current situation and is taking preventative measures will reassure prospective guests and communicate to them that your property is a safe bet when it comes to taking that much-needed weekend getaway.
- Keep Your Finger on the Pulse: Use tools such as SEMRush and Hootsuite to monitor organic and social media mentions of your brand, your competitors, and the industry as a whole. Knowledge is power; the more you know about how the public is reacting to Covid-19, the better able you are to react.
- Pick Your Battles: Now is definitely not the time to focus on brand awareness. Focusing on Search and/or Display advertising will enable you to go deeper down the customer funnel and advertise to those more likely to interact with your brand. Reconsider your use of Paid Social for the moment, especially if you are in a particularly hard hit segment, such as the cruise industry. While the targeting options provided by social platforms are tempting, the likelihood is that you are going to be inundated with unwanted comments and reactions.
- Stop Paying for Unwanted Mentions: People searching for your brand name + Covid-19 or CoronaVirus are likely not prime candidates for booking a stay. Negate virus-related keywords across your paid advertising accounts to ensure that you are not using precious marketing dollars to serve ads to these users.
- Observe Your Bid Strategies: Anytime there is a major market adjustment, automated bidding systems will be slow to properly adjust to the new market variables. A decrease in search volume will lead a “max clicks” bidding strategy to big much more aggressively while a “max conversions” strategy will lead to lower bidding on the average term but significantly escalated bidding on past converting terms. If you’re seeing major performance swings in bidding, consider bringing the campaign under manual control with max cpcs based on historical averages.
- Test, Test, and then Test some More: Testing should be a cornerstone of your digital marketing activities, even in times of relative calm. Use Paid Advertising channels to determine which ad creative and copy resonate best under current circumstances. For example:
- Images/copy focusing on individuals vs groups
- Images/copy highlighting common areas vs room amenities
- Images/copy featuring a sauna or steam room vs massages or beauty treatments
While the public is viewing air travel – particularly international air travel – with an increasing amount of apprehension, this does not mean that desire to travel in general has disappeared. People are increasingly looking to domestic destinations as a safe option (especially if these destinations are located in remote areas). Travelling domestically mitigates the risk of having to quarantine yourself in an unfamiliar country or not being able to return home. The same can be said of local destinations. The below table shows search volume for the term “Staycation” over the last 7 days (March 6 – March 13)
Source: Google Trends
Create Offerings for Locals/Drive Markets: Develop offers or packages aimed specifically at this audience. Consider that these travellers are likely more interested in a relaxing getaway than they are in exploring the area from top to bottom. Consequently, look at including perks that resonate with them, such as free parking, early check-in/late check-out, and F&B/Spa credits.
Another option is to double down on working with local content creators. Think Timeout and Narcity, for example. Posts such as this tend to get a ton of traction on social media and are a great way to generate interest in your property.
Create Offerings for Domestic Markets: Local partnerships are a great avenue to domestic business. Located near great museums or shopping? Close to historic attractions/monuments or parks? Odds are, these businesses are also suffering. Developing a closer relationship will enable you and your new partner to not only develop more enticing package offerings, but also to leverage each other’s marketing capabilities.
Develop Supporting Content: As previously mentioned, people are still searching. So, if you’ve just created a bunch of exciting packages to attract travellers from different markets, it’s important to make sure that these are featured on your website and throughout your advertising. For example, if you are targeting local travellers, think about creating a staycation-themed page featuring your package offerings and any local partners you work with. Also consider sharing this via email. Here’s an example done by Zero George, a property we’ve worked with.
Leverage Geo-Targeting: Geo-targeting is an important tool at
the best of times, but right now it should be your best friend. All those great offers we spoke about above? Use geo-targeting to ensure that you are getting them in front of the right audience.
What’s more, look at your Google Analytics and Google Ads data to see if there are any markets seeing stable performance. For example, many of our clients are still seeing strong traffic from Latin America. Over the past couple of years, this has emerged as a strong feeder market for luxury properties. And with the spread of Covid-19 far less pronounced here, interest from this region has stayed very stable.
On the flip side of that, negate any regions or countries experiencing high rates of infection. No one is travelling in Italy right now, so why spend advertising dollars here?
Double Down on Channel Management
Now more than ever, it’s important to push direct bookings. With the available “pie” getting smaller, it’s important to minimize the piece taken by OTA commission rates. Your revenue manager is a critical ally.
Strengthen Book Direct Offers: Be critical of your book direct offer. Past performance data will hint at whether there’s an opportunity to strengthen the value proposition. This doesn’t necessarily have to be a monetary discount; instead, it can be things such as F&B credit or complementary add-ons.
Additionally, make sure that this offer is front and centre in your communications. This offer often has a tendency to get lost at the bottom of Offers pages.
Bid on Your Brand Name Only When Necessary: With budgets under tighter scrutiny than ever, it’s important to ensure you are making the most efficient use of your paid advertising spend. For example, if you face little competition for brand name terms there’s no point in paying to appear top of the page. However, if OTAs are making it difficult for you to capture branded search intent, it’s important to continue bidding on your brand name.
Leverage Existing Bookings
While revenue has certainly seen a decrease in the past couple of weeks, bookings haven’t stopped altogether. These guests represent a significant opportunity in that they have demonstrated intent to travel despite current fears. Maximizing revenue from these bookings should consequently be a priority.
Focus on Cross and Up-Selling: These are textbook sales and marketing approaches that never go out of date. Think of creative ways to generate additional revenue from each booking.
For example, with increased room inventory available, it’s easier to offer discounted room upgrades. A more creative approach to this would be to offer families the option to book an additional adjoining room with kid-friendly extras (special room service, spa services for minis, etc.). Alternatively, if you have a F&B or a Spa on-site, offering credit is a great way to generate additional revenue and keep staff busy. Email is a great tool to leverage, as cross/upsell offers and packages can be presented to confirmed guests before they even arrive
This goes beyond digital marketing and also applies to staff who frequently interact with guests. Specifically, management should work with concierges and event sales/planning staff to ensure they are comfortable cross and up-selling.
Reconsider Your Cancellation Policy and Communicate it to Future Guests: Considering the average booking window for luxury travellers, it’s safe to assume that many of your future guests booked at least 6-8 weeks in advance. For more experiential properties, this figure gets even larger. As the situation continues to worsen, these guests may be reconsidering their trips. Consequently, it’s important to consider a deferment policy. Allowing guests to defer their stays should significantly reduce cancellations.
This policy should be communicated on your website, as well as in an email to future guests. While you may see more deferrals than you would like come from this, a deferral is significantly better than a cancellation.
Last, but certainly not least, are returning guests and members of loyalty programs. Given that these individuals have already had the opportunity to form an emotional bond with your brand, they may exhibit less hesitance to return in the current conditions. Especially if their journey does not include international air travel.
Create Offers & Programs Aimed at Previous Guests: The simplest way to do this is to offer a monetary discount to repeat guests. This could come in the form of an Advanced Purchase discount offered upon checkout, or a “Friends of the Hotel” offer shared via email.
However, this is an especially significant opportunity for properties with multiple revenue streams. For example, if you have a spa you can use your email database to contact past spa guests with a “Spa and Stay” package. Alternatively, you could consider creating a loyalty program, where guests visiting your spa, restaurant, gym, cafe, etc. see a discount (or perk) after a certain number of visits.
Leverage Email Data for Paid Advertising: Campaigns leveraging email lists often see strong performance, as we’re able to target individuals who have already interacted with the brand. These individuals are far lower in the conversion funnel and therefore are associated with far less conversion friction.
Covid-19 and Beyond
It’s worth remembering that while the travel industry is very sensitive to uncertainty, it rebounds quickly. Travel is a wonderful thing that connects us all. Travel is how people spend their most precious time, with the most important people in their lives. This will never change. The majority of trips that are currently being cancelled or rethought will happen at some point. Consequently, it’s important not only to focus on the situation at hand, but also to consider your post-crisis marketing plan.
If you have questions about any of the recommendations above, please reach out to your Wallop Strategist. If you’re not currently working with us, please don’t hesitate to send any questions to firstname.lastname@example.org. We’re all in this together.