As the world’s and the travel industry’s response to and recovery from the COVID-19 crisis continue to unfold, we are now shifting from reactive measures to proactive steps to enable travel and restore travel demand.
As said by Arne Sorenson, the president and CEO of Marriott: “The glimmer of good news is that negative trends appear to have bottomed in most parts of the world.”
Alex Dichter, the senior partner at McKinsey who heads the consultancy's aviation practice, recently described the five stages that companies will navigate as we manage through the COVID-19 crisis to restoration and the new state and growth of travel.
We are now in the “Return” stage on the path to the “Recovery” and subsequent “Reimagination” stages.
Thus, we are now shifting from the “Maintain” phase of COVID-19 response to the “Engage” phase and headed toward a “Reset” phase. In the “Engage” phase, the travel industry as a whole and individual companies are now turning attention to the marketing initiatives that will be most effective.
Rebuilding travelers’ willingness to travel and reactivating travel demand is going to require a multi-tiered approach of layered marketing activities by different entities to serve different purposes. No single player will be able to accomplish what is required.
The primary aim of marketing activities to generate travel demand must first and above all be to reduce uncertainty as the precondition for increasing willingness to travel. Reducing uncertainty and increasing willingness to travel needs to be accomplished at four levels: travel industry, category, brand and destination.
Reduced uncertainty and increased willingness to travel is foundational for the effectiveness of marketing activities to stimulate specific demand and generate bookings for individual travel companies (e.g., airlines, hotels, cruises, theme parks), travel types (e.g., leisure, corporate, conferences) and destinations.
Driving bookings will require four levels of targeted marketing activity:
- business type
- geographic
- traveler profile
- personalized
Before going on, we need to consider briefly the impact of COVID-19 in historical context and, most importantly, the pervasive uncertainty that distinguishes the COVID-19 crisis and alleviation of which is essential to restoring travel demand at scale.
A unique crisis
The COVID-19 situation combines a health crisis with an economic crisis, each of historic scale and with its own recovery process and curve. History doesn’t provide any fully comparable events to guide our path forward.
As Roger Dow, the president and CEO of the US Travel Association, said on a recent ADARA webinar, the impact of COVID-19 on the travel industry is nine times more severe than that of the 9/11 attack.
Yet, the travel industry can call on its experience, insights and accomplishments from previous events.
Most memorably, after 9/11, top leaders from the travel industry, led by Marriott and through the Travel Industry Association of America, conceived, funded and executed by November, 2001, a television advertising campaign to stimulate travel that was inspirational, compelling and impactful.
Reducing uncertainty and increasing willingness to travel needs to be accomplished at four levels: travel industry, category, brand and destination.
Tom O'Toole - Kellogg School of Management
Subsequently, we’ve learned from SARS, terrorist attacks, the 2008 financial crisis and more.
The COVID-19 crisis differs from all of these past events not just in its combination of health and economic crises, nor just its scale, but in its psychological, emotional and practical dimensions.
Simply put, people are afraid to travel. This fear, or at least ongoing apprehension and anxiety, will endure and suppress travel demand for an extended period after the immediate threat subsides.
Beyond the understandable fear and worry about health risk, there is a myriad of practical uncertainties about the travel experience. Airlines, hotels, theme parks and many others are putting in place new protocols and procedures for safe and hygienic travel and accommodations.
Pre-travel testing, post-travel quarantine and/or tracking and related procedures are likely to follow. Even veteran business travelers are now wondering “how is this really going to work?” and what exactly travel will entail. Will it be a grueling, invasive experience, with pre- and/or post-travel requirements, that will sap the desire to travel and time efficiency of doing so, when we now have increasingly acceptable video alternatives?
The changes will be real and people will need to adjust to the new travel experience. Ultimately, we will adjust, new procedures will become routine, and the growth of travel demand will resume, but in the meantime there is a heavy layer of experiential uncertainty.
Moving forward
In addition to the psychological and experiential, there is geographic uncertainty about what destinations are open and what policies and requirements apply by country, regionally and locally, as different areas emerge from the COVID-19 shutdown at different paces. The psychological, experiential and geographic uncertainties all combine to discourage travel for many people right now.
Thus, the primary task of marketing initiatives in the emerging travel environment will be to reduce uncertainty. As Alex Dichter said, we need to restore people’s “confidence to travel”. This needs to be done at the industry level and furthered at the category, brand and destination levels.
Then, stimulating specific demand and generating bookings through marketing initiatives targeted to specific business types, traveler profiles and individual travelers can be effective.
In that framework, we can consider the nature and purpose of the first four levels of travel marketing that will be required to reduce uncertainty.
The travel industry level
This spans all categories of travel providers, destinations and related businesses. The main purpose of marketing initiatives at this level is to reduce uncertainty and anxiety, restore confidence in travel, advocate and encourage people to travel.
The U.S. Travel Association, Brand USA and others, for example in the U.S., have key roles to play in doing so.
The category level
This refers to airlines, hotels, car rental, cruises, attractions and other types of travel providers. Industry associations (e.g., A4A, AHLA, CLIA) are appropriate vehicles for specific campaigns.
The main purpose of these efforts is to restore confidence, and reduce uncertainty and anxiety, with specific reference to the measures being taken by the respective type of travel providers and new category-specific travel procedures.
This will also be beneficial to smaller players in the respective categories that may not have the means to undertake large scale marketing campaigns about, for example, new hygiene procedures.
The brand level
This refers to the brand marketing activities of major travel providers (e.g., airlines, hotel chains) in their respective categories.
The main purposes of these marketing campaigns are to restore confidence, and reduce uncertainty and anxiety, by:
- addressing the specific measures being taken by the respective company for the health of its passengers/guests
- explaining the new travel experience to reduce health risk (in other words, answering the practical questions, “What will I need to do?”, “How will this really work when I fly/stay/visit?”)
The destination level
This refers to marketing activities, analogous to brand marketing by travel providers, on behalf of specific destinations, locations and venues. The main purposes of these marketing campaigns are largely the same as for the brand marketing, plus answering two additional questions: “Are you open?” and “What’s it like there now?”
As a foundation of reduced uncertainty and growing confidence is established, marketing initiatives at the business type, geographic, traveler profile and personalized levels can effectively stimulate brand/destination specific demand and generate bookings.
Tactics
Different business types warrant and require differentiated marketing campaigns to remind people of the value and appeal of different travel purposes and stimulate demand. The example of a campaign for business travel that comes to mind is a television commercial (“Speech”) run by United Airlines in 1989.
In this iconic commercial, an executive reminds his team of the need to connect with customers and hands out airline tickets. While the portrayal looks dated now, the message resonates with renewed relevance.
Meetings, incentives, vacations, honeymoons, weekends and more all are subjects for specific marketing activities to reinvigorate travel for specific purposes.
Targeted marketing campaigns will be required for specific geographic regions, routes, origins and local markets. As geographic regions, origin and destination markets, industries and other sub-markets open on different timelines, recover at different rates and have different business potential, differentiated marketing campaigns will be required to optimize marketing investments and effectiveness.
Will travel be a grueling, invasive experience that will sap the desire to travel and time efficiency of doing so, when we now have increasingly acceptable video alternatives?
Tom O'Toole - Kellogg School of Management
Targeting extends to the mainstay practice of marketing to specific Traveler Profiles. Customer data systems and customer analytics enable this level.
Clearly, travel patterns and behavior history that predate COVID-19 have been abruptly disrupted and may not apply going forward, so we can’t just project from the past, but propensity models can be informed with input and assumptions from current market data (e.g., route demand, localized economic conditions, industry recovery rates, differentiated recovery by traveler profile) and then refined and optimized based on performance and other new data.
Targeting by traveler profile, already well-established and very advanced in the travel industry, will be more important than ever in the COVID-19 recovery, starting now. This will be executed mainly through digital channels, enabled by third parties.
Targeting by traveler profile extends to Personalization at the individual traveler level. Many people have observed that COVID-19 is accelerating developments, beyond the travel industry, that were already emerging. This applies to personalization.
The major travel players (e.g., airlines, hotels, theme parks, cruises) are already advanced in their use of personalized marketing systems.
This will be essential to their regeneration of travel demand. That said, we can see certain opportunities for personalization that will be key . This is the level where the strength and value of loyalty programs will be most evident and exercised in multiple ways.
Major travel providers have already taken steps (e.g., extending status qualification) to secure high value travelers.
Beyond the immediate steps, however, the loyalty programs enable other ways to stimulate travel. For example, targeted redemption pricing (i.e., the number of points or miles required for a travel redemption) can be an appealing incentive to travel while contributing much-needed revenue and getting people back on planes and in rooms.
The economics and practical complexities involved are consequential, but the loyalty programs clearly are playing and will play a major role in rebuilding individual customer value.
Thinking in new ways
Marketing at the individual level is not limited to the major travel players with the largest customer databases and loyalty programs. Virtually all travel providers, destinations and establishments have guest history systems and past customer databases to market directly to the individuals who have traveled with us and to us in the past.
Finally, the use of AI and machine learning for personalized marketing by companies in and related to the travel industry has been developing rapidly in recent years.
The application of AI and machine learning holds great promise for targeting and personalizing marketing to stimulate and incent travel given the unique circumstances of the COVID-19 recovery.
In short, the travel industry must alleviate the enormous uncertainty and anxiety about travel that exists and will be the legacy of COVID-19 for some time, and reestablish willingness and confidence to travel, as the foundation for restarting and rebuilding travel demand that results in sustained growth of bookings and revenue.
We are now turning our attention to the combination of marketing initiatives needed to do so. This will require a multi-tiered effort that extends from the industry level to the individual level.