Travel TrendsTravel companies urged to be ready for the boom: McKinsey report

Urgent business in travel: Get your capacity up to speed

Travel companies advised to make sure they have the capacity to handle the boom ahead.
Travel companies advised to make sure they have the capacity to handle the boom ahead. Photo Credit: Gettyimages/Dilok Klaisataporn

A McKinsey & Company report is urging travel companies not to sit on
their hands waiting for travel to pick up post-pandemic, but to take action now to restore capacity.

“The most pressing imperative for all companies across the travel supply chain is bringing back capacity or, at the very least, ensuring that they’re able to do so,” McKinsey reported.

The management consultants said the loss of contract and temporary workers who were laid off during the pandemic have found other employment and – notably in the restaurant sector – were reluctant to go back to their former jobs, resulting in a labour crunch.

Travel companies would be well advised to rethink their commercial approaches, McKinsey noted, because “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,” McKinsey said.

McKinsey’s tips for travel trade recovery

Don’t skimp on digital

While cash might continue to be in short supply, an area still worth considering for over-investment is digital operations. The customer experience is shaped across the entire end-to-end journey, from booking to travel to the return home. Travellers now need more, not less, assistance.

Aviation’s big challenge

McKinsey’s latest survey of more than 5,500 air travellers around the world shows that the aviation industry faces an even bigger challenge than Covid: sustainability.

Emissions are now the top concern of respondents in 11 of the 13 countries polled, up from four in a McKinsey 2019 survey.

However, travellers continue to prioritise price and connections over sustainability in booking decisions, especially in Japan where only two per cent of travellers polled are willing to pay more for carbon-neutral flights.

Travellers might begin to make different choices if emissions featured more prominently in the booking process – particularly if more airlines offered CO2 reduction measures that delivered genuine environmental impact, McKinsey said.

Corporate travel still in cruise control

Hotels will need to find new purposes for meeting and conference spaces, which are slower to fill, McKinsey said.

“Airlines need to figure out how to fill intercontinental business class, likely with premium leisure promotions. 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.”

Chinese travellers need incentives

McKinsey conducted five rounds of surveys to understand Chinese travellers’ sentiment – results indicate an emerging pattern of periods of suppressed travel demand followed by a quick recovery.

“Accordingly, travel companies can focus on uniqueness or experience to drive loyalty, in tandem with loyalty programmes or discounts. They could also consider developing seasonal offerings to satisfy customers’ desire for new attractions and experiences.

“Branded hotel chains could also expand their offerings by including local experiences,” McKinsey reported.

The wrap: What the future looks like

The various parts of the travel industry need to work together as a whole to usher in a safe return of travel. Even as individual companies improve their internal operations, they should also keep a close eye on industry-wide developments, watching for collaboration opportunities.

“Given shifting trends, it may be helpful for all industry stakeholders to maintain a deep and up-to-date understanding of consumer segments in each market that they serve.

“With continued perseverance, travel companies can ensure that travel is not just back – but better,” McKinsey said.

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