A new report indicating that travel demand will surge back “with a vengeance” comes with an important rider.
US management consultants McKinsey and Co believes those in the industry who are ill-prepared for the post-Covid boom in travel will miss the chance to recoup profits lost during the pandemic.
McKinsey says that by focusing on four key areas — building capacity, investing in digital innovation, revisiting commercial approaches, and learning from critical moments — travel companies “can seize value as they exceed the needs and demands of their customers”.
The report suggests that all those across the travel supply chain, from travel agents to hotels to airlines, will need to work together to usher in a safe return of travel.
I have lost revenue during the pandemic. I can’t afford to invest in staff.
McKinsey: Rehiring and training service staff can be pricey, but the cost of standing by and doing nothing would be higher. Travellers now need more, not less, assistance.
Certain critical journeys and moments — such as a family vacation, an important business trip, or a last-minute emergency — carry a disproportionate weight in consumers’ minds when they plan their next trip.
Remember, the customer experience is shaped across the entire end-to-end journey, from booking to travel to the return home. Even seasoned travellers will have to adapt to new protocols, such as digital health certificates and safety measures.
It’s not just staff rehiring and training, I have little money for investing in digital operations.
McKinsey: Even if one pain point in the customer journey is not satisfactorily resolved, the entire perception of a travel company can be degraded. The industry needs to make sure that processes are smooth for reopening and that adequate assistance is available for travellers to help them adapt to new ways of travelling.
Investing in digital analytics can allow companies to identify opportunities to differentiate their services. Companies would also be able to discern emerging trends and hiccups before they turn into nightmares.
I still need to be convinced that if I invest in my business, the rewards will flow back in a reasonable amount of time.
While the process is daunting, clear-sighted travel leaders know that preparing their organisations for a surge of travellers is also an opportunity to redefine their value propositions and make their offerings distinctive. This will not only reinstall confidence in travel but also increase customer loyalty.
Ill-prepared companies may find themselves facing the wrath of a cohort of leisure-focused vacationers who might already be struggling to keep up with new travel protocols.
If the industry doesn’t work to increase capacity now, the ecosystem may buckle under the pressure, forcing travellers to endure long wait times and inflated prices.
It’s been a long time coming, but we see several factors aligning that could lead to a short-term travel boom, although not all countries and customer segments will boom at the same time.
With continued perseverance, travel companies can ensure that travel is not just back, but better.
How will things be different when universal travel restarts?
McKinsey: Travel companies may rethink their commercial approaches. The profiles of airline passengers and hotel guests will be different: more leisure guests, later booking windows, and higher demand for flexible tickets.
Historical booking curves are no longer a good indicator of current behaviour. Travel companies need to use every source of insight they can to anticipate demand and optimise pricing.
Flexible pricing models can also ease customer discomfort with today’s heightened levels of unpredictability.
I’m a corporate travel agent: How will the recovery affect me?
McKinsey: For all travel companies, the boom may be higher in traveller numbers than in profits, as the most lucrative corporate business has been slow to return.
Hotels will need to find new purposes for meeting and conference spaces, which will be slower to fill. Airlines need to figure out how to fill intercontinental business class, likely with premium leisure promotions.