Darwinism is often summed up as survival of the fittest; a more accurate read is that those who adapt best survive. But what adaptations will help businesses in the travel industry survive the Covid crisis, and what conditions can survivors expect to find on the other side?
Perhaps the best place to begin is "the other side." It's assumed, reasonably, that travel advisors will be in demand post-crisis to assuage consumer insecurity about safety and sanitation. Trust, not inventory, has always been the basis for a strong advisor-client relationship, and reassuring clients will take on greater prominence than ever before.
And suppliers will want to leverage the trust a consumer has in an advisor. There's a reason that "we're all in this together" has become the unofficial motto of 2020. It's why you see some cruise lines paying double commissions on rebookings and why suppliers and destinations are maintaining strong communications even while travel is paused.
The truth is, there's likely to be fewer travel agencies post-Covid. With consumer demand for advice high and competition thinned, advisors who adapt now by sharpening their expertise, particularly in areas of sanitation and health, can thrive.
But to get to that promised land, there is a threat to advisors that undermines the very trust they need to maintain. Too many advisors find themselves caught between suppliers and clients when it comes to cancellations, refunds and rebookings.
Every travel-related business finds itself in a cash crunch, often simultaneously on the giving and receiving ends of slow, no or deferred payments.
Meanwhile, many consumers are experiencing salary reductions, furloughs or layoffs, and some desperately need a refund of payments or deposits for trips booked, then canceled. I'm told of instances where tens of thousands of dollars are being held by a supplier despite a client's dire need. Consumers, naturally, are turning to the advisors who booked their trips to advocate for them and get their money back.
This situation presents a huge challenge for both advisors and suppliers. A WeTravel survey reports that a little under half of all tour operators offer full refunds; another 27% say they're awaiting reimbursement from their vendors; others may offer refunds or credits, charge a small fee for a refund or even offer to negotiate with a client. Ten percent flatly state they will not refund.
Preferred supplier relationships, essential to the retail channel's operating system, rely on trust every bit as much as do advisor-client relationships. Suppliers that are unwilling or unable to make refunds and can't offer a credible or convincing explanation that the advisor can pass along to clients end up eroding their relationships with advisors and the advisors' relationship with clients.
I'm not passing general judgment on supplier no-refund policies -- in such a moribund economy, there's no room for stone-throwing -- but the entire situation is the largest elephant in the room. If the half of the tour operators that don't give refunds did so but were mortally weakened as a result, a post-Covid landscape pocked by high-profile tour operator collapses would not be a healthy one for advisors. It's why Travel Weekly's legal columnist, Mark Pestronk, discourages agents from recommending that clients take a refund versus future credits unless there is an urgent need for cash, and he notes that, depending upon the supplier-agency agreement, advising a client to dispute a credit card booking charge could result in a debit memo to the advisor.
Similarly, although consortia may be applying pressure on behalf of advisors onto suppliers whose refund policies upset their members, they typically stop short of dropping the supplier for fear that doing so could be the nudge that pushes the supplier over the edge. At that point, all hope of refunds or future credits disappears completely, possibly making a difficult situation worse for the advisor.
To recap, the advisor needs to bolster trust now to come out strong when recovery occurs; the supplier needs a healthy agency channel to leverage that trust; some supplier refund policies undermine client trust in the advisor; the advisor nonetheless needs the supplier to survive, both in hopes that a refund or future credit can be realized and to have a strong network of inventory to tap later.
So how does one adapt, not only to survive but to be positioned to benefit from expected pent-up demand? For advisors, sharpening expertise and understanding the ins and outs of sanitation protocols will pay dividends, and for suppliers, putting those protocols into place is table stakes. Beyond that, as Darwin demonstrated, adaptation is highly individualized to specific environments, and every business's place in the travel ecosystem is unique.
In Abraham Maslow's famous pyramid-shaped hierarchy of needs, the foundational level defines what's necessary to live, e.g., food, shelter, water. The foundational level for the travel industry, both pre- and post-crisis, has only two components: cash and trust. Unfortunately, adaptation becomes seriously more complicated when these two come into conflict.