Travel industry leaders are thinking hard about what bold, decisive action they must take as a result of the global COVID-19 pandemic.
The ever-expanding search for ways of “Flattening the Curve” to halt the spread of the coronavirus now includes travel bans and unprecedented “lockdowns” of entire countries.
To survive, travel companies must also act quickly. Looking back to previous crises can help.
During the 2008 financial crisis, the management team of my former company (a large European online travel agency) made deep, across-the-board budget cuts.
Such timely, significant cost reductions were recommended by an influential 56-slide document from VC firm Sequoia Capital called “RIP Good Times” (a/k/a the “Presentation of Doom”) that still guides the actions of many business leaders 12 years after it was published.
Thoroughly dissecting the underpinnings of the crisis with tough-love mandates for survival, it projected a prolonged recovery and emphasized preserving capital.
Their prediction for companies not heeding their advice to cut costs deeply, quickly? A rapid descent into an inescapable death spiral.
Without a doubt, all of this was great - if not unwelcome - advice that worked: as a result of the huge cuts, my former company increased profit when sales rebounded and was sold about 18 months later.
But the RIP Good Times presentation lacks a key ingredient: a vision for the future. The last slide simply says “GET REAL or GO HOME.” Survive or die.
Having to lay off staff is the most difficult decision any manager has to make. Yet, that’s exactly what had to be done. Or was it? What if by cutting staff across the board, we might impede future growth? Is there another way?
Question every assumption
When a friend sent me Sequoia’s latest missive “Coronavirus: The Black Swan of 2020”, if felt like deja vu all over again, offering similar guidance on cash runway and headcount in a more concise post.
But rather than a school-marm scolding with specific action items, it focuses on a more important task - calling upon leaders to question every assumption about their business.
Instead of mandating quick, deep cost cuts, it asks “where could you trim expenses without fundamentally hurting the business?”
A common assumption is that cutting headcount is required in a downturn. Sure, it’s the largest expense for nearly all companies. But in an increasingly competitive environment, good talent can be hard to find. When you have a special core team - like we did at my first startup, Site59 - you can weather any storm and accomplish great things.
Take care of your core
After 9/11, travel companies faced similar, if not greater challenges than they do today.
Stocks cratered, demand plummeted and it wasn’t a question of whether you could fly or not - planes were grounded. It wasn’t a downturn, it was lights out.
Our startup Site59 had just started to gain traction through white-labeling our last-minute packaging tech to online partners.
At the time, then-CEO Michelle Peluso was undoubtedly under intense pressure to make significant cuts. But she also knew the value of the special team we’d created - the kind of team that would do whatever it takes to succeed while having fun doing it.
Our last-minute mini-OTA inspired people to travel this or next weekend. Post-9/11, we saw bookings pick up well before most mainstream travel companies did and went on to power the last-minute deals section for Travelocity, who acquired us in 2002.
As a testament to the power of that team - and the decision not to cut staff earlier - Michelle became the CEO of Travelocity, and the Site59 team would go on to leadership positions across the industry.
So when you’re deep in survival mode, keep an eye out for where you can trim expenses - without, as Sequoia says, fundamentally hurting the business.
Doing right by customers and employees creates long-term value. Site59’s team was core to its success in weathering a crisis and growing to $100M in sales.
Survive to thrive
It’s counterintuitive to think of growth when you’re doing all you can just to survive. But having a growth mindset during a crisis can better prepare you for the future upswing.
Here’s how travel companies can #survive2thrive:
- Cash Moves: Sequoia’s 2008 advice to have 12 months cash on hand still rings true today, whether you’re a startup or established business. Trim where you can, without hurting your future business - or look for opportunities to lock in value, now.
- Say it, Don’t Spray It: pardon the precautionary pun. It’s logical not to advertise while there are active travel bans. But that doesn’t mean you stop marketing. Marketing is about connecting and creating customer empathy. Frequent, relevant, updated information is critical during a crisis - don’t leave it to a static “here’s how we’re
responding to COVID-19.” Focus on why it’s important to them.
- Customer Service is Marketing: handling cancellations is often seen as an operational cost center. But such interactions are opportunities to build loyalty. It costs much more to acquire than retain customers. Not everyone will be happy, but treating them with transparency, honesty and respect now can pay off later.
- Avoid Drip Campaign Damage: in times of crisis, keep customers informed with timely messages that reflect how people are feeling. Review any templated automated campaigns like the email I received from a co-working space inviting me to its grand opening party: a tone-deaf message at a time when health experts are advocating social distancing.
- Tone-Woke Communications: paradoxically, some companies are sharing current precautions and travel restrictions while promoting discounted offers. Some younger travelers are jumping on flight deals, even at the risk of being stranded. But even though it may seem safe - check the latest advisories from your government and the World Health Organization - is it the right thing to do? Let customers know where you stand. Take this opportunity to start a conversation, to know them better: are they cautious or carefree? Do they want a deal, or to make a difference?
- Distance Earning: I’ve worked remotely for most of my career. It’s an adjustment, but it can increase productivity and work/life balance. Check these remote work tips from 10 top companies via our fave project management tool, Trello.
- Prepare to Thrive: Previous crises have shown how pent-up demand for travel can lead to a strong recovery. As more people work from home and schools close, they'll start dreaming about when they can get away and to where. We're ready for that at TripTuner, are you?
Above all, be safe, follow the health and travel recommendations for your locality and keep in mind those most in need of help. We’ve faced crises before and we’ll find our way through this one. Hold fast to your vision.
May your business not only survive, but thrive in 2020 and beyond.
About the author...
Tedd Evers is the founder and CEO of TripTuner