Yesterday, I outlined how the past might provide a blueprint for preparing for future pandemic outbreaks. Today, I focus on what specific segments of the travel industry might expect once the crisis passes.
The late Stanley Plog, for decades the industry's go-to research guru, said "cabin fever syndrome" always kicks in and leads to a surge in demand for travel that can actually help lead economies out of recessions. Our current economic malaise, however, is not part of a cyclical recession, and I think there may be a particular challenge that must be overcome: Restoration of confidence.
It plays out in many directions. There is much talk and many examples of industry unity and how we are all in this together. But when money stops flowing, the need to conserve cash becomes a prime directive. Airlines become allergic to issuing refunds. Tour operators are reluctant to pay commissions to travel advisors for trips that have been rebooked to a future date. Insurance companies point to clauses that protect them from making Covid-19-related payouts. And deep layoffs mean that customer service wait times only grow longer.
There's also been the unfortunate coupling of travel to disease; on cruise ships, in airplanes, aboard public transportation. The idea of limitations on the number of people who can gather safely is taking root in the global consciousness, much to the detriment of the events-related industries. Conventions, festivals, conferences are being associated with contagion.
All of these undermine years of hard-won brand equity and the nurturing of long-term relationships during better times. Hence, the need for restoration of confidence. The following are, as stated in yesterday's column, "possibilities": problems that may need to be addressed and the possible means to address them.
While it's almost instinctive for enterprises to resist government regulations, for a period after the crisis ends it might be in the best interest of cruise lines, airlines and hotels to invite official inspection that leads to certification. Currently, the Centers for Disease Control and Prevention (CDC) inspects cruise ships, and if the ships fall below a certain score, they cannot dock in U.S. ports.
Cruise lines may want to work with the U.S. government to enhance the CDC's Vessel Sanitation Program in ways that reassure the public that images that came blasting out of the media for months about "floating petri dishes" won't happen again. Airlines, hotels and car rental companies may also seek out a CDC equivalent of a Good Housekeeping Seal of Approval as regards to sanitation and health.
The travel insurance companies, I think, may face a reputational challenge of a different sort. On one hand, insurance sales tend to go up following a crisis because those who didn't buy insurance may wish they had.
But in an unusual time such as this, where travel has come almost to a halt, virtually every insurance policyholder who bought coverage for travel from March onwards is filing a claim, and many may discover they're not covered for Covid-19-related claims.
A consumer forwarded to me an email letter she received from a major travel insurance company that contained a perfect Catch-22: If the State Department issued a warning not to travel to a country but did not forbid travel to that country, the company would not cover a claim because fear is not covered.
However, should the traveler encounter a Covid-19-related issue while traveling -- either they get the disease and incur extra expense or their trip is shortened or aborted because of circumstances related to Covid-19 -- they are not covered because such an occurrence is not an "unforeseen" risk; after all, the State Department warned them there was risk.
The email stated that even expensive "cancel for any reason" insurance may -- repeat, may -- result in partial restitution.
It's hard to imagine such a policyholder, denied coverage or receiving only partial coverage due to a Covid-19-related loss, deciding to ever purchase travel insurance again, unless there is a concerted effort to restore confidence.
And, there may be a knock-on loss of confidence that works against the travel advisor who sold the policy.
But more broadly speaking, there may be a unique opportunity for travel advisors when the crisis ends. Interestingly, just as a hyper-growth cycle has been the undoing of many a young company, a recovery period holds dangers for large companies. As the crisis unfolds, the ranks of supplier sales forces are being culled through layoffs and furloughs. Their best salespeople could be picked off by stronger competitors. And when demand returns, suppliers must, in the midst of trying to fulfill what could be a high volume of bookings, rehire, train and rebuild sales and customer service organizations.
The depleted sales/customer service forces provide a spectacular advantage for travel advisors. As a group, advisors are a ready, trained and knowledgeable sales force which, if they've kept up their relationships with clients during this time of crisis, do not carry the baggage of confidence restoration that might be afflicting whole sectors of the industry. In fact, because they have personal relationships rather than email-blast relationships, travel advisors may emerge as a key messenger in efforts to restore confidence.
The present moment, in fact, would be a good time for advisors to signal to their preferred suppliers that they should be considered as suppliers' formulate rebuilding plans.
And, suppliers, beware: Advisors are also paying attention to how you have treated their clients during the Covid crisis and may well be reevaluating their preferred-supplier list based on your current policies and behavior.
As regards to business travel -- particularly meetings and conventions -- the advent of Zoom and other teleconferencing tools has led to speculation that they may become permanent substitutes for face-to-face corporate gatherings of various sizes.
This prediction arose once before, with the twin occurrences of the Great Recession and the rise of telepresence. At the time, it seemed teleconferencing was poised to replace the meetings industry, and for about three years, business gatherings were greatly challenged.
How did the meetings industry restore its place in the corporate world? It was accomplished mostly by the passage of time. People realized that while business may be scheduled by Outlook invitations and conducted over WiFi, there was also a great deal of value in a serendipitous meeting of a prospect in the hallway of a convention center, a chance conversations with the stranger seated one over at a banquet table or a random conversation during a happy hour mixer. Zoom is great when we absolutely can't be together and will no doubt find its place in office communications, but it's not a replacement for people with like-minded business goals to get together.
Take the above as musings, a few possibilities of the infinite ways economic historians will eventually record the outcome of the post-Covid era. And if some of what's written comes to pass, bear in mind that they may only be, in "Sapiens" author Yuval Noah Harari's words, historical speed bumps.