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How will travel industry transform post-Covid


Unlike philosophers, journalists and teenagers, the world of entrepreneurship does not permit the luxury of gazing into a crystal ball to predict the future. An entrepreneur’s world is instead made of MVPs (Minimum Viable Product), A/B Tests, launching products, features or services and gauging / measuring their reception in the market to arrive at verifiable truths which can drive the business forward.

Which is why I have never written about my musings or hypothesis about travel industry – we usually either seek customer feedback or launch an MVPised version and gather market feedback. However, with Covid-19 travel bans across the globe, the industry is currently stuck – while a lot of industry reports and journalistic conjectures are out, there’s no definitive answer to the way forward. Besides there is no way to test your hypothesis since even the traveller does not know what they will do when skies open.

So, I decided to don my blogger hat and take the luxury of crystal gazing today – below are some thoughts on how the travel industry may see itself a few years after Covid bans end.

Sidenote: My general take about everything “post Covid” is that Covid will only exacerbate trends we have seen coming for last several years, in some cases, decades. Covid is not so much about a change of direction as it is about speed. Covid will accelerate hitherto hidden trends and provide velocity to existing transformations.

Dip, Slowdown or uptake?

While opinion is abound, most research suggests that with Covid, corporates may adopt Work-From-Home as a permanent situation even if not necessitated by environmental reasons. As work gets done for longer duration remotely, and people’s minds and schedules adjust to remote nature of work, several work categories will soon settle into a permanent habit of remote efficiency. When the world finally opens, this would mean that while many workers would surely throng to their offices to meet colleagues – businesses’ propensity to fund business travel would surely reduce.

On the other hand – and this is where I gaze into my crystal ball – as more people start longer-term remote work, their need for leisure travel may go up substantially. Travel is fundamental to human existence – if the first humans had not wandered out of the African continent, the history of human evolution would have been very different. Just like man is a social animal, he is also a wanderer – wandering is embedded in mankind’s DNA and it is impossible to take that away from us.

So, to compensate a long-drawn shelter-at-home / work-from-home fatigue, not only would leisure travel provide an immediate succour but the trends for leisure travel may see a permanent bump for times to come, may be even (over)compensate the reduction in business travel budgets.

Travel Agencies?

Many travel agencies have shuttered temporarily to brace the Covid storm. Almost everyone has administered a pay cut to employees, some have laid off staff, some have paused salary payments on a temporary basis. As the skies open up, many of these half-shut hibernating agencies will wake up and start again. There are many possibilities which await them:

  1. Resumption of pre-Covid work schedules and load 
  2. Partial resumption with lowered transaction flow [owing to lower business travel]
  3. Expectation of lowered costs / commissions from clients 
  4. Expectation of digital / remote experience in providing services earlier delivered in person 

If I were to take a bet, I believe #4, followed by #3 are sure to happen; while either of #1 and #2 may transpire for agencies depending on how well they embrace #4 and #3. In the last few months, many people have tasted comforts of remote work / life, especially the otherwise digitally shy [boomers or equivalent generation] and become comfortable with using digital means. So travel agencies which relied on footfall from their presence in prominent commercial districts, may realise that a digital presence is as or more important to solicit customers. At the same time, agencies which already have digital presence, but low-profile physical presence may see a faster revival of business.

Expectations of digital experience may transcend the need to just have a website, customers may expect a deeper digital experience in terms of self-service/customer-service. Further, their expectations from their regular travel agency may be referenced based on their experience with other digital players like OTAs or Payment apps.

Another trend which Covid will intensify is a shift from fulfilment to customer service – already customers access the same travel information that agencies do. The travel agent’s value therefore is in ‘curating’ the travel plan as per the customer’s preferences and in providing value added customer service. Demonstratable value addition, coupled with digital delivery, will be key to survival and flourishing of travel agencies.

Destination Management Companies (DMCs)

Essentially the ‘suppliers’ of all services you consume when you travel, DMCs are the equivalent of ‘ancillary industries’ in manufacturing. Same as Small Scale ancillaries they thrive on lean cash flows and workforce – a lot of gig economy work, whether its taxi drivers or amateur tour guides depend on DMCs for their livelihood. DMCs have been hardest hit by the Covid-19 bans as regular cash flow has been disrupted and with their already lean model, they haven’t had much buffer to support their employees / contractors / gig workers.

While their regular cash flow will resume as Covid-19 bans lift across the globe, there are some fundamental shifts which will occur in the DMC world also. Just like travel agencies will need to digitise, DMCs will also need to feed into this digital supply chain if they want to stay relevant. This is no different than other gig-economy workers. Just like an Uber driver has a better chance of getting an on-demand booking, compared to a taxi which operates in the taxistand, DMCs who are already a part of a digital platform will recover faster than others.

Plugging in to the digital supply chain may be much harder than one imagines. Unlike an Uber driver who just needs to enlist his/her profile with the app and get started, a DMC will need to do a lot more work. It starts with digitising the ‘rate-card’ of services – many DMCs still work via email providing quotes based on ‘manual calculations’ done by staff. Having standardised services, rates cards, rate calculations [including tax considerations], they need to either customise them to fit the digital platform’s template or develop their own software to provide online feeds. [Full disclosure: Darwin’s solution provides potential solutions to DMCs in the in-between space also. Contact here to explore more]

Once the price determination / quotation is taken care of, DMCs will also need to explore opportunities of digitising the fulfilment cycle. DMCs shall need to use digital means such as Messenger apps, mobile apps and QR codes to make it easy for the traveller to avail the services they have booked or to reach out to the DMC for help.

Online Portals

This is a tricky one, because the Online Portals come in several shapes and sizes. More importantly they are simply the window to the existing fabric of travel service companies. While it is true that the offline travel agency has been hit hard over last several years with the rise of the Online Travel Portals, the offline world has also transformed itself to cohabit the ecosystem. Covid-19 has hit offline and online players equally in terms of revenue but unlike small offline agencies, who may have the luxury of laying off staff, online players may not be able to do so. Further, there are technology costs which are fixed and difficult to cut out completely.

I do not have any general prediction to make for the online portals except that the industry may see consolidation in the coming years, but also that innovation will remain key to not just survival but thriving in future. Players who embrace new realities, ideate, iterate, fail fast at lower costs are sure to reap the long-term fruits that the post-Covid-19 world begets.

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Image Credits: Raja Patel via unsplash 

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