The Government has done an excellent job of putting the country’s business community into Hibernation, via its Furlough scheme, whereby companies using Government funding, have been able to effectively close their businesses on a temporary basis, whilst paying staff 80% of their salaries up to a maximum of £2,500 per month.

The Government has also enabled high street Banks to issue government-backed loans to companies who can show a profitable track record over the 18 months before the Corona Virus outbreak and has even helped the Self-employed.

The glaring gap is assistance to Start-up businesses. 

Steve Endacott, Co-Founder of Rebound Consulting commented, “ I have seen hundreds of start-up business and a common denominator, is that the business plan is often to lose money in the first 2 years whilst they reach critical mass and then make profits from year 3 onwards, with a hockey stick rise in profits thereafter.

My own Holiday Taxis Group followed this path and ended up carrying 7million passengers and being sold successfully, but if it had been started in the last 2 years, I believe the Corona Virus would have bankrupted it. 

Start-up’s like most businesses will be using Furlough grants to stagger on for the moment, but once these grants stop many will not have the capital required to relaunch and will quickly fail unless they can raise further funding.

Many private investors will be looking at the predictions of a recession, as bad as the Great Recession of the 1930s and will be hesitant to invest further.  Unless the Government reduces their risk by creating a loan fund to match their investments

“Governments by their nature,  are not well-positioned to assess the quality of start up’s management team or business plan, likewise banks tend to focus their loan approvals on historic numbers rather than the typical optimism of most start-up business plans, but “Angel” investors who are risking their money in the form of equity investments are”, said Rebounds Will Waggott.

Rebound Consulting is calling on the Government to match investors money with government loans.

Seamus Conlon said “Start-ups will still need to convince private individuals to take the largest risk, with “All or nothing” equity investments, but the Government start-up fund would match this investment, with a loan repayable after 3 years trading, paid off over a further 5 years. This type of long term loan would allow the business to grow in the crucial early years creating wealth and jobs for the country.”

“The government COBIL loans scheme is barely working for existing SMEs, it ignores startups completely”.  

“As we come out of Corona Lockdown, many existing businesses are going to reduce in size and the country will see large scale redundancies and a major surge in unemployment. As usual, the youth of the country may suffer the most, as they find themselves competing with the market place full of experienced and newly redundant workers”, said Will Waggott

Steve Endacott commented “Few Entrepreneurs are created at birth, but start their own business because they have a great idea and often have just lost their jobs. Many people will be using the current lockdown period, to flesh out ideas that they have been tinkering with for a while, in preparation for being made redundant.”

Rebound Consulting believes that the Government needs to help harvest these ideas and create conditions for a wave of new start up’s and support the existing start-ups

Rebound Seamus Conlon commented “Travel is one of the sectors that are likely to suffer the most from the Corona Lockdown and the following recession. However, we know we have a bedrock of creative people, who are customer-focused and used to working in relatively risky business. I think we could easily see the next big thing in travel emerging in the next 18 months with the right support and funding”.

Customer refunds and card chargebacks dominate queries to industry advice portal Rebound Consulting, according to founders Steve Endacott, Seamus Conlon and Will Waggott.

The three industry executives launched the Rebound consultancy to offer free travel business advice at the end of March.

They highlight refunds as the issue most troubling tour operators and retailers seeking advice, with operators struggling to recover deposits paid to hotels or event organisers and forced to defer bookings or issue credit notes.

Even retailers operating trust funds face difficulties, according to Endacott, noting: “A retailer may have cleared £1,200 for a holiday into their trust fund, but paid out £500 for a low-cost flight, with the airline now offering a date change or credit note.

“If the customer wants a refund and recharges their credit card, the retailer not only loses their commission, but also £500 of flight cost they don’t have.”

Endacott said: “Large OTAs like On the Beach may be able to recover their payments from the airlines via recharges on the virtual credit cards they use to book, but many retailers dynamically packaging don’t have this protection and are fully exposed.”

Conlon said: “In principle, customers should always be offered a full refund as an option if a service or product can’t be supplied.

“[But] none of the current rules envisaged a complete cessation of travel or airlines not refunding travel agents or tour operators. We all need to be practical about the timescales of refunds.”

However, Conlon added: “My preference is that companies secure overdrafts and loans to fund expenses rather than rely on customer monies which should have been refunded.

“That way you know you have cash available and don’t have to worry about disgruntled customers destroying the reputation you have built with Facebook posts.”

The Rebound Consulting trio also note that although companies are furloughing staff, many are hesitating to furlough directors or senior staff.

Waggott said: “Furloughing staff closest to you is the hardest decision to make, but often you need admin staff to rebook customers on a rolling basis and not expensive management not used to doing the day-to-day jobs.”

Endacott added: “Most business leaders have got the message about cutting costs to the bone.

“But being the head of a business is a lonely position and I’m been told several times it has helped people to get some reassurance from a third party that the decisions they are making are the right ones.”

He suggests many directors forget to apply the logic they adopt in business to their home life.

Endacott said: “The next nine months are going to be the hardest of our working lives, with most people on furlough or taking large pay cuts.

“However, many people I have spoken to seem to have forgotten about themselves or feel it to be a failure to defer mortgages etc. It’s not, it’s just sensible to take the pressure off at home while you’re going through hell at work.

He said: “I recommend seeking rent or mortgage holidays and suspending as many large outgoings as you can until you’re back to full earnings. You have the rest of your working life to pay these off.”

Endacott was co-founder of Holiday Taxis and a former chief operating officer of On Holiday Group. Waggott was both head of tour operating at Thomas Cook and chief financial officer at Tui. Conlon is a former managing director of Airtours Holidays and TV Travel Shop and non-executive director of Cruise.co.uk.

I have to confess to having been a “Remainer” in the great Brexit debate, as I felt the economic damage of leaving the European single market was large.

However, I do support the new “points-based” immigration system and don’t trust the Euro politicians to be in charge of laws governing the UK. To be fair, I don’t also trust UK politicians but at least we can vote to remove them.

But why are these comments relevant during the coronavirus crisis?

Because, I think other European countries will soon be facing populist pressure to leave the EU. The coronavirus crisis and self-isolating, has made us focused on “family first” and country second.

In reality, Europe has quickly fragmented into individual states, with all boarders shutting and countries focusing their medical resources internally, with few thoughts about acting as a single united European Union, moving resources as required to coronavirus hot spots. Of course there have been some examples of inter-country assistance, but these appear to have been extremely limited.

Economist are telling us that for every month a county is in lockdown, its GDP will fall by 2% and therefore the entire world is predicted to exit the coronavirus lockdown into a recession as bad the 1930s Great Depression.

As a newly ’independent’ country, with our own currency, Britain can use “fiscal easing” to borrow heavily and plough cash into funding measures to counter the coronavirus downturn, such as business rate holidays, further salary subsidisation and investment in infrastructure projects, to name a few.

If needed we can also devalue our currency to make exports cheaper and imports more expensive, whilst introducing whatever import tariffs we believe necessary to protect UK employment. 

People may hate Trump and believe his tariff-led negotiations will cause trade wars, but you can’t deny the boost in US economy since his election – even if it has been at a severe cost in terms of world harmony.

Economically, there are major benefits to European states staying together, including a large tariff free single market and a central bank, able to borrow money at much lower rates, due to the strength of the whole and the balance sheets of the stronger counties like Germany and France, balancing those of weaker economies like Italy, Spain and Greece.

As we have seen with Greece previously, poorer EU counties tied to one currency and a central European bank, have far less leavers to pull to get them out of recession and reduce unemployment levels. Quite often the richer countries, who are there to bail them out, impose stringent austerity policies that are deeply unpopular, in order to ensure their loans are repaid 

We have already seen in the US and other countries, how successful populist politicians can be. Promise the world today and ignore the consequences tomorrow, often gets people elected. So don’t be surprised as we emerge from the coronavirus crisis and head into recession, if Greece, Italy and even Spain’s choose to put the short term above the longer and decide to leave the EU, in order to take back control of their own currencies, laws and economy.

From a travel industry point, the upsides of this are probably greater than the downsides. New currencies often devalue, making the destination better value for holidaymakers. These newly independent counties will in turn want to continue to attract UK tourist and should have aggressive tourist boards providing co-funding for advertising. I also can’t imagine visa or fifth freedom flying rights being an issue with major holiday destination like these.

In hindsight, perhaps the UK exiting the EU ahead of the coronavirus fallout will turn out not to have been such a bad idea after all.

In the first of a series of blog posts, the travel veterans behind

Reboundconsulting.co.uk share practical steps SME travel businesses should take to navigate through the crisis

The government’s key focus is locking down the country. To facilitate this they have generously introduced the Job Retention Scheme, allowing non-essential staff to be furloughed and paid 80% of their salaries. However, don’t expect such a generous scheme to be in place for long – businesses should be planning on staff either re-joining the payroll or being laid off before we exit the full impact of the coronavirus.

The government’s next focus will be avoiding large-scale job losses and large travel firms such as airlines which employ a lot of staff in the UK and have strategic benefits, may receive further emergency support to stave of collapse. But even this may come at the cost of giving the government substantial equity stakes.

SME businesses can apply for the government’s loan scheme, but again these loans are by no means free and although every qualifying business should take them to improve liquidity, they should be used with extreme caution, as they are not free and will have to be repaid.

Cut all cost possible to survive today

SME travel companies can only survive this crisis by cutting overheads as near to nil as possible. If you have no income, you cannot have any overheads.

Although it is emotionally difficult, staff have to be furloughed, and that means everyone who is not absolutely necessary, needs to be sent home. Those staff who have stayed on will not expect to be paid more than 80% of their salaries, so don’t pay it. The harsh reality for many travel businesses, is that if they don’t take advantage of the government furlough scheme they will run out cash quickly and go bust.

All other overheads need to be renegotiated and cut. Here are some key ones to start with:

• Stop paying business rates for a year and defer VAT payments till June

• Renegotiate rents with landlords. Ask for a payment break or deferral

• Computer maintenance and all other office related expenditure needs to be cancelled where possible

Effectively, your business needs to be mothballed as soon as possible.

Cash is king

Cutting overheads to as close as nil as possible will clearly help cash. But every of route of cash retention needs to be considered:

• All suppliers should be contacted for cash refunds and/or cash support for the business

• Customers need to be given credit notes instead of cash refunds where ever possible

• Secure any government-backed loan possible, but don’t spend it unless you absolutely have to

Plan for the rebound

The rebound will come, but your business cannot be the same as before the crisis. You need to be leaner, keener and work smarter.

You know who the core members of staff are, the ones willing to go the extra mile and on the journey with you. It’s time to let those who aren’t go and replace them with better staff. Homeworking will be the norm, so embrace it and use it to recruit better staff from a wider catchment area.

Spend the quiet time you have now to work out solutions for all those inefficiencies you will have lived with for years. Sometimes this involves technology, but often it’s just about reviewing processes and cutting out the inefficient, “that’s how we have always done it”, bits people do.

Marketing costs money, so focus now on re-engaging with previous bookers to make sure you have their latest contact details and remind them you are there for their holiday needs when the rebound does come.

Using your time wisely costs nothing and can save a lot of money when the rebound comes, so start thinking and planning now.

The UK Government has already ordered 3.5 million Corona Test kits, to allow self-testing of whether people have already had the Corona Virus and have developed the IMG/IGG antibodies, that hopefully indicate immunity to re-infection. At the moment nobody can be 100% sure such immunity does exist, but all experts believe this is likely to be the case.

The Government will need to support these test, with a formal and centralised registry, that issues “Corona Clear Certificates” and this may require positive tests to be ratified in a similar way to passports, by teachers or qualified accountants etc, since medically trained staff are likely to remain fully deployed elsewhere.

These certificates will initially be vital for identifying the element of the population that already have had the disease and have enough immunity to allow them back to work. It’s obviously vital to get the economy moving again, with most experts hopeful that this can occur after the peak of infections has passed and some semblance of control has returned to the NHS.

However, the travel industry needs to accept that opening boarders to allow leisure travel is likely to remain a relatively low priority for most countries.

Boarder where originally shut down as part of the “containment” stage, where Governments try to restrict the entry of the virus into their countries, from other infected countries.

Once the virus has got a hold in a country, it is then “locked down” to try to smooth out the peak of infections, to allow medical services like the NHS to cope.

Some travel observers have predicted the opening of boarders as soon as the peak has passed, as the closure does little to slow the spread of the disease at this stage, compared to the banning of mass gathering or local gatherings in pubs etc. 

I personally think there will be a much longer delay as international Governments are likely to insist on an accredited “Corona Clear Certificate” for foreign visitors, before they will be allowed entry to the country. These certificates will be used in conjunction with passports, but are likely to be issued via electronic means, so they can be scanned from mobile phones.

These certificates are also likely to form part of airlines APIS systems, since like Visa’s the airlines will be made responsible for checking customers have the required paper work to enter a country, before boarding.

Therefore, the industry via ABTA and other trade bodies needs to be lobbying hard to make sure they are included in any Corona Clear Certificate planning, so that all airlines and travel companies can adjust their systems during the quite shut down period, long before the first buds of travel start to blossom again.

I remain optimistic that the good times will return to travel, but feel that we need to take our destiny into our own hands and actively work on the removal of any potential barrier to the resumption of travel now.

In times of crisis, people often ask “What can the Government do to save jobs”.

In the current Corona crisis, that is set to decimate the travel industry, the answer in my opinion is simple.

Allow airlines and travel companies, to make it compulsory for customers to defer holidays, until the Corona Virus has receded and normal travel can be resumed. This clause will only apply if FCO advice is not to travel to a county for a period and airlines are forced to stop flying, just as Jet2 have to Spain today.

Unfortunately, we live in a “Selfish World” and consumer left to their own devices, will demand full refunds under the package travel regulations or process recharges via credit card companies, under non delivery of products rules. Who can blame them, if these are the rules that apply.

However, the impact of this will send many travel companies and Airlines bankrupt. Airlines like British Airways are already going to suffer massive losses, due to having to ground aircraft and the difficulty in scaling back staff numbers fast enough. The bigger you are in a crisis, the more likely you are to go bust, so please don’t believe having a major brand is any form of safe guards.

Having to refund the millions of customers who have booked, but cannot travel for a period that could amount to months, will simply send airlines and travel companies bust.

The only solution therefore is for the Government to change regulations, to permit airlines and travel companies to mandatorily defer flight and holidays. They can then tell customers that they have to choose new dates for their holidays either next year, which is the safest solution or for later in the year.

The customer would still get the holiday they booked and paid for, but just a later date. Obviously, companies would have to waive all amendment fees and take the administrative burden of rebooking at no cost, but I can guarantee that every travel company I know would agree to this.

The alternative is wholesale collapses and an ATOL fund that has been so depleted by the Thomas Cook collapse, that it could not cope, forcing further Government funding.

Some customers may not be happy with this deal, but most would accept it as being fair and reasonable in these exception circumstances, if it saves jobs and keeps airlines alive. The alternative is fewer players and much higher flight/holiday prices when we come out of the other side of the Corona pandemic.

In a crisis cash is king and sorry customers, but we need to retain your cash for a while in order to survive.

Like most industry observers I think Corona Virus has been massively overhyped and much of the current down turn in sales is media induced, since for most people the heath impact of the Virus will be minimal. However, the impact on travel business is real and unlikely to go away.

Having worked in the industry during 9:11, the gulf war and 2008 financial crisis, the current Corona Virus worries me more as its impossible to predict the length of the impact, so in my opinion its definatly time to baton down the hatch’s. All businesses are different, but here are 10 actions I’d recommend people consider.

1. Cut overheads by 20%-30% immediately.

Unfortunately, the easiest cut is often staff. Every business I have ever worked with has a layer of “Fat”, that is only dealt with in a down turn. Cutting staff forces a business to become more efficient, by either using new technology or by stopping work that has no real benefit. Once you have cut staff this drastically, every working practice gets revisited and staff simple don’t have time to “do it the way it’s always been done”. I know readers may not want to hear this, but business survival is crucial for the 70% of staff left and bluntly some jobs are better than none.

• Implement 4 day week and homeworking.

It’s important to keep key staff so you can expand again once the crisis recedes and to manage the business through tough times. However, these people are often your most expensive resource.

Moving to a 4 days week and giving key staff an extra day off a work a week, greatly softens the 20% wage cut you need them to take. Maybe get them in a room as ask “which one of you do you want me to get rid of, as if you don’t all agree to take the pain equally, that’s my only choice.” Setting up full homeworking capabilities using Zoom or Google hang outs video conferencing is also a must. We have to assume that major cities will be shut down making homeworking capabilities a necessity for virtually all businesses.

• Stop ALL IT spend immediately.

Businesses need to worry about today and not tomorrow in a crisis. If it works now, don’t try to fix it! Expenditure on IT is often one of the major cost of a business and of course some expenditure will be locked in contractually with third parties, but most can be post postponed.

• Marketing.

Cut back to the essentials that drive 60% of your current traffic. Cancel any above the line TV, radio etc and focus on immediate calls to action, which have the lowest cost. Google advertising costs should fall as companies cut back, but I’m not convinced google will allow this easily, so it needs to be driven by players cutting back bid terms aggressively.

• Chasing every lead and maximizes margins per booking

With less leads, its vital to increase conversion. In a shop or online, its vital that every lead gets chased down. Within shops this may involve implementing further data gathering and a 100% follow up procedure, either by phone or email. Similarly, in call centres a target of 1-2 call backs per inbound call might be a sensible metric, whilst online players may increase their remarketing targets using social media like Facebook. Maximising margins by yielding higher and upselling Ancillaries is probably also a good idea is a slow market.

• Removing reasons not to book.

Customers will clearly be worried about booking at the moment, in case they need to cancel their holiday because of an outbreak of Corona Virus in their holiday destination. Tour operators and retailers dynamically packaging are acting as principals and will be responsible for refunding customers, if FCO advice is changed to tell customers can not travel to a destination, so why not make this 100% clear? Offering Travel Insurance that also covers medical costs will provide reassurance whilst also providing increased revenue per sale.

• Reduce the “Principal Risk”

Tour operators and retailers dynamically packaging are acting as principals and will be responsible for refunding customers if FCO advice is changed to say customers can not travel to a destination. A dynamically packaging retailers should be booking all low cost carrier flights via virtual cards, so that if a flight is cancelled they can recharge all bookings via their virtual card provider for non-delivery of product. All hotel accommodation needs to be booked on a payment on arrival basis, with all use of non-cancellable or pre-paid rooms stopped. This will reduce cancelation loses to lost margin, which is painful enough, but not as deadly as a full agent funded refund.

• Cut the number of Suppliers.

In times of reduced demand, it’s important to cut the number of suppliers you have and work more closely with a smaller number who you can negotiate better payment terms or over rides with. The more fixed assets a level of the travel chain has, the more they will be feeling the pain. For example, Hoteliers will be desperate to fill rooms and will offer lower rates and/or higher commissions. Make sure your business benefits.

• Manage cash brutally.

Revised forecasts for trading 15,30 or 50% down are required, with a realism level about cancellation. What you thought was in the bag, may not be for long. Every business needs to ensure that they stock pile cash as much as possible

For retailers this may involve scraping low deposits and bringing final balance payment dates earlier, however Trust funds often mean this consumer cash cannot be used, mitigating any benefit. Similarly, low cost carriers are not going to allow booking without full payment, but hotel partners may be forced to take later payment if demand is switchable.

1. Renegotiate everything.

In times of crises, the 20 biggest expenses need to be reviewed and if at all possible “renegotiated”. For example, will a high street landlord give a “rent holiday” rather than losing a tenant, they are unlikely to be able to replace in the short term. The same applies to office rents, equipment rental and all third party contracts. It may even be time to negotiate a delay in payment of rates to the local councils. Just remember having something is better than nothing to most suppliers, when they are unlikely to be able to resale the assets your using.

Travel insurance is not a cure for the many issues facing travel companies, but it might be a useful tool in pushing a hesitant booker over the line, says Steve Endacott

Many customers are worried about booking holidays, in case an outbreak of coronavirus in their holiday destination puts their health at risk or forces them to cancel their holiday. Google is already reporting a 25% drop in holiday searches.

We all know that the current media hype is an overreaction to a disease that has a death rate no higher than the average flu, but unlike the flu we currently have no natural immunity or treatment for it. Unless you are old, have pre-existing medical conditions or underlying health issues, coronavirus is unlikely to kill you, but will make you ill and bed bound for a short period of time. Obviously, not something you want to happen on holiday.

The problem with the current media coverage for the travel industry, is it’s highlighting the quarantine risk, of being caught on a “plagued ship” or a “plagued hotel” for two weeks, ruining your holiday experience. In real terms, this risk is infinitesimal, however it’s the one being placed forefront in most travellers’ minds and in my opinion, doing the most damage to demand.

The other major perceived risk is that travelling via airports is high risk, because of the mingling of people from multiple destinations, increasing the risk of spreading the virus. I have to confess to walking slightly faster past people with an Italian accent at Heathrow recently.

Some people also believe that close proximity and recycled air on aircraft make them havens for the disease, even though little documented evidence of this exists.

While we don’t have outbreaks of coronavirus in the UK, the fear of travelling to a destination like Tenerife, where just one hotel is affected, is obviously intensified and bookings have dropped like a stone.

Like most people, when I’m ill, I’d rather be at home with access to my local doctor or NHS hospital if anything escalates. Therefore, I’m likely to avoid booking a holiday to a destination with coronavirus as I’d rather suffer at home than overseas.

So it’s easy to see why holiday searches have dropped by 25% and unfortunately how things could get worse.

However, what happens when, inevitably, it does reach the UK and you are just as likely to get infected at home as abroad? The answer I’m hoping is that the dam will break and a lot of people take the ‘it’s only the flu’ approach and continue to travel on holiday.

Travel insurance is not a cure for any of the issues above, but can be a useful tool in pushing a hesitant booker over the line.

Holiday insurance companies are still offering cover to destinations currently unaffected by coronavirus and would allow you to cancel and get your money back, provided the Foreign and Commonwealth Office does not advise against travel.

So today customers who have already booked holidays to Tenerife, are able to take out insurance. Put more bluntly, customers would be mad not to immediately make the most of this opportunity, as it’s one of the few times customers can still get insurance for a known issue, before it escalates.

I’m sure insurers will quickly tighten restrictions for destinations where the virus has been found and may even push up premiums, so I’d advise people with existing holiday bookings to act fast, while reading the small print of their insurance policy to ensure they will be covered.

Given a 25% drop in searches, it will not be long before tour operators and airlines are forced to drop prices to stimulate demand. Very soon we will be seeing some real holiday bargains being presented to customers.

If these are combined with the sale of a travel insurance policy that guarantees customers their money back in the case of the FCO advising not to travel to a destination, or in the unfortunate case a customer does get ill on holiday, then I personally might be persuaded to continue with my plans and book my usual summer holiday.

Travel insurance is never going to drive demand, but it may help with conversion!

The more Big Data an OTA has, the more it can expect higher conversions or higher margins, says Steve Endacott

Back in 2003, when we launched the On Holiday Group to exploit the changes dynamic packaging would drive in the beach holiday sector, our primary focus was growing passenger volumes fast.

Our logic was that when operating in a commodity market with low barriers to entry where most players can source exactly the same flights and hotels for the same price as you the key differentiator was how efficiently you operated.

In other words, you have to drive the highest possible volume through the lowest overhead.

Basically, the bigger you get the lower your overhead per passenger and the cheaper you can sell holidays for, whilst still making a profit.

In general, this point still applies, however very quickly Google advertising costs became the biggest business overhead and slightly different rules apply.

Google’s paid bidding algorithms (Paid Per Click) favours bigger companies, because a key element of what companies pay is their CTR – how many times customers click on an advert compared to being shown it.

Obviously, companies at the top of the listings get the highest levels of clicks, thus favouring bigger companies, with large budgets, who have been around for a while.

However, the key online marketing metric is mix of direct brand traffic, measured by how many customers type your brand name into Google or, ideally, type in your URL.

The better known a brand is, the more people come direct at a fraction of the cost of generic destination or resort-based advertising within Google.

The virtuous cycle is where increasing brand traffic reduces Google advertising costs, which in turn allows the OTA to sell at lower prices to drive higher passenger volumes, which drives more brand traffic.

Obviously, customers also only return to a brand if it has a good customer service experience and delivers the promised holidays seamlessly.

Direct traffic is also influenced by the ability to afford large scale brand building TV advertising.

The UK’s largest beach OTA, On the Beach, markedly boosted its direct traffic in January via a very successful above the line TV campaign which increased its market share.

However, market share has to come from somewhere and Travel Republic’s recent financial accounts, showing dropping passenger volumes and heavy losses, seems to indicate that they are in the opposite negative cycle.

Hence, my view that the bigger are getting bigger and the rest maybe losing out.

Of course, this does not apply across all sectors and many specialist businesses with have high satisfaction levels also have high levels of repeat business and can also avoid the Google-created “death zone”.

For instance, homeworking networks like Travel Counsellors completely avoid Google, relying on personal contact and customer loyalty to drive ongoing relationships.

The other area where being big matters, is so-called Big Data.

Travel companies have millions of data points, created while customers travel through the holiday booking journey and understanding these is key to modern yield management.

In the early days of dynamic packaging, simplistic margins models where deployed, based on competitor pricing analysis.

Hotels where marked by a flat percentage across a destination or resort, with a pounds amount added by airline to flight prices.

However, now competitors prices are often ignored, in favour of Big Data analysis of an OTA’s own customer journeys.

Whether prices are increased or decreased, is triggered by comparing a resort’s average conversion level to that of the site as a whole or historic conversion levels.

This automatically allows for competitor pricing, since uncompetitive pricing drops conversion which drops prices.

More importantly, pricing based on internal traffic allows for the right pricing to be applied based on traffic source or purchasing indicators.

Pricing by source of traffic is now very common, with the highest prices being charged to loyal customers coming straight to the brand and lowest prices to customers coming from price comparison sites, which by definition are the more price sensitive.

Hot spotting pages, to identify the flights and hotels being reviewed for the longest period is just as important to pricing as reviewing the final hotel or flights booked.

This is because it gives you a much bigger volume of data, earlier in the booking path and allows you to adjust pricing on a prior-to-sale basis.

OTA’s also recognise how important it is to appear cheap at the early stages of the booking process in order to drag people further down the booking funnel.

This is why OTA’s always try to get customers to widen their departure airport choice to London Any and automatically return the cheapest flights within a week of a customer’s chosen data, rather than just the day they asked for.

Combine this with mixing and matching airlines and OTA’s can appear to offer cheaper prices than the airlines themselves, whilst still actually making some healthy mark ups.

Within the hotel results, everybody has moved away from a cheapest first price order, to a merchandised list, based on the highest converting hotels.

This allows the OTA to focus demand into a smaller range of hotels and use the higher volumes within these hotels to secure bigger margins.

Simplistically, the bigger an OTA the more Big Data it has and the more it can expect to turn this data into either higher conversions or higher margins through right pricing for customers based on where they have come to the site from and their purchasing indicators while on site.

Sophistication costs money and hence in my view the big will get bigger and the rest need to differentiate themselves from these companies to survive. Do you agree and if so what’s your strategy?
 

Extract from Steve and Ian’s Pub-cast https://podcasts.apple.com/gb/podcast/travel-industry-pubcast/id1487319392

A reduction in lease costs and the development of an out-of-hours homeworking network will be key to ensuring Hays Travel’s expanded retail presence has a long-term future, according to former Airtours chief Steve Endacott.

Speaking to fellow travel industry veteran Ian Brooks during the first episode of a new Travel Industry Pubcast, Endacott insisted high street travel retail continued to have a future following the collapse of Thomas Cook, but must evolve to become more convenient for customers.

The demise of Thomas Cook caused significant pain for the industry but led to Hays Travel acquiring all 555 of the travel giant’s agency branches for £6 million.

Brooks, partner in Gail Kenny Executive Recruitment and a non-executive director at Arena Travel, said: “The more you look into that deal, the more you can see he [John Hays] has bought himself wriggle room.”

Endacott doubted whether all the shops will be retained with the key element being how many leases can be re-negotiated. Given the current difficulty on the high street, he predicted that Hays will end up with 350-400 outlets.

“It won’t be 550, I can guarantee that, but I think it will work for him,” predicted Endacott. “It depends who will provide the stock for him, which leads on to our second question – who is going to replace the capacity taken out by Thomas Cook?”

Brooks backed the Hays deal but questioned how much longevity there is in the high street and how long retail can work in travel.

Endacott responded: “The key thing is customer access. If you are relying on Google to recruit customers it’s too expensive, so you have to have a 30%-40% return loyalty factor and it’s quite difficult to deliver in an online world where you don’t actually control the end result experience which is the case of most OTAs.

“Looking at the cost dynamics, I think that if he can get the lease costs of the high street down, if he can potentially put a homeworking network to support those shops to make them more convenient in terms of opening hours, I think the high street has a long-term future.

“They key issue is how it manufactures its own product, to go alongside the product of Jet2 and Thomson [Tui] because we both know they will drive as much direct to their channels as they can. If they perceive the independent channels weak, they will cut commissions.

“So I don’t think independent retailers can rely completely on those products, although in certain areas you have to sell them, but they have to complement them and complement with what?

“Yes, there’s expansion in long-haul, yes there’s expansion of tailor-made, yes there’s expansion of experiential but they still need beach product and I wouldn’t be 100% relying on the only two big players at the moment replacing that stock.”

Brooks admitted to being “quite shocked” to hear Endacott promoting high street retail to online.

Endacott responded by describing homeworking as the number one model followed by OTAs and the high street.

He added that the high street must still evolve to be more convenient for the customer at a time when homeworkers are available in the evenings and for home visits.

“They don’t demand that the customer has to repeatedly walk into their shop,” he said. “So, therefore, I think there is still an evolution to go but the relationships in the shops can and will be extended as we move forward into the next generation high street retailer.”