The date February 23, 2020, marked a significant turning point for some tours and activities brands.
Although rumblings of a new coronavirus began to hit the radars of many in January and the threat of the outbreak amplified throughout February, it was February 23 when everything “started to spiral,” says Sean Finelli, CEO of tour operator The Tour Guy.
According to the Centers for Disease Control and Prevention, as of that date, there were 76,936 reported cases of COVID-19 in mainland China, 1,875 cases outside of mainland China and 53 cases within the United States; Level 1 travel notices were also posted for Iran and Italy.
"All of a sudden, on the 23rd, things really broke out,” says TourRadar CEO Travis Pittman.
“Once it was announced that there were a lot of cases in Italy, that for us was basically the turning point where things started to kick in. Since then, I feel like every day is almost like a week. Every hour is a new turn of events or a new announcement or a new thing.
“You get to the end of the day and you think, 'What just happened?'"
What did happen?
According to Withlocals CEO Matthijs Keij, when news started to break around the coronavirus in January, the Dutch tours and activities brand, which operates more than 1,500 experiences in 56 cities across 26 countries, initially expected to see its business impacted in Asia.
"Every year, we about double our growth, so the revenue for January 2020 is roughly twice as high as the year before in January. But in Asia, we were [at a growth rate of about] 1.7.”
It's beautiful when you see shit hit the fan globally and people really show their good side.
Sean Finelli - The Tour Guide
Keij says his team initially treated the inconsistency as a “blip,” but it quickly became apparent “this could have a really big impact to our business.”
As Italy started to contend with the outbreak, he says hosts in the region reached out to say they could still work and the interruption was temporary ("I guess they were also a little bit in the denial phase,” Keij says), but that changed as countries went into lockdown.
Bookings dropped, meaning revenue wasn’t coming in, while at the same time cancellations started to “skyrocket,” Keij says.
The Tour Guy, which has offices in Rome as well as in Philadelphia and Paris, similarly saw its business "slowly get worse and worse and worse until you're grinding to a halt now,” Finelli says.
Pittman believes that for TourRadar, which specializes in multiday tours, the Vienna-based company wasn't hit quite as drastically as others in the beginning due to the longer nature of its tour offerings, which are typically booked three to 12 months out from the departure date.
"Obviously, deeper into the crisis, people realized those trips probably weren't happening or started to get nervous about it. Then we did start to see, definitely, more cancellations come through.”
"Everyone's just trying to get through this together"
In response to the growing outbreak, diverting marketing spend away from affected regions became an important cost-saving measure as well as a way "to not put it in people's faces," Pittman says.
Withlocals similarly cut down marketing spend as close to zero as possible but was still forced to downsize its staff of 60 by 25%. "It's really frustrating. I had a lot of difficult conversations this week with people [who think], 'Why did you pick me and not somebody else? Because my performance was good, I work long hours' - and that's all true,” Keij says.
“It feels like you're going to do surgery on a perfectly healthy person. You shouldn't do that. But in this case, you have no choice.”
It feels like you're going to do surgery on a perfectly healthy person.
Matthijs Keij - Withlocals
Finelli says The Tour Guy attempted to retain as much staff as possible: Some employees chose to leave on their own, he says, while others agreed to change their compensation plans in exchange for equity in the company.
"I was expecting people to kind of just abandon us, but I was overwhelmed and surprised when people didn't," he continues. "It was a really great opportunity to understand what people thought about the company and how many loyal people we had that stayed onboard.”
Customers, too, "have been amazing," Finelli says: The majority are choosing to switch dates over asking for a refund, and those receiving a refund have been understanding that it might take longer than usual.
“It's beautiful when you see shit hit the fan globally and people really show their good side.”
Pittman says it's been critical to maintain its relationships with not just customers, but also tour operators, who are taking an income hit.
"Everyone's just trying to get through this together. No one's trying to do what's good for them alone.”
He says TourRadar put in place a "credit for future tours" feature to encourage people not to cancel and has been "working literally one by one with all tour operators" to get them onboard with the initiative.
"The customer response is like, 'Thank you. I still want to do this trip, but not now.'"
Keij paints a grimmer picture of what some Withlocals hosts are facing in Italy as the crisis worsens. "One of our best hosts from Rome, two weeks ago, said, 'Guys, I really have sleepless nights because all these bookings get canceled. I lose all my money and I don't know how to handle this.'
“Then a couple days ago, he said, 'Yeah that's not my worry anymore. I worry about my mom in an elderly home; I cannot go to my girlfriend's. I still don't know exactly how to deal with this, but health and family are my first priorities.'"
Looking forward
To assist struggling hosts, Withlocals is coming up with new initiatives to promote engagement, including a podcast where they can share their stories. Hosts are also devising their own ideas: One host in Italy, for example, is offering a cooking class remotely in place of an in-person experience.
"If we really believe that people care about those connections, about learning from each other, what if we can find a way to do it remotely?" Keij says. "It could be a good starting point for a completely new way of doing business.”
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Pittman says he's seen an uptick in social media behavior from tour operators promoting travel for when the crisis abates, and TourRadar’s communication with its customers - through its customer support team and directly - has proved invaluable.
"I sent out an email to the entire subscriber base ... to say, 'Look, these are tough times, but we will travel again.' The response has been ridiculous. I think we had around 300 individual replies saying, 'That lifted my hopes today.'"
Of course, the uncertain trajectory of the coronavirus means there's no clear picture as to when travel will be on the upswing again. "I am confident in how I see the industry coming together, how I see the support from the government level, from the investment level. There are a lot of positive things coming out during a very, very tough time,” Pittman says.
“[Once we] actually pull through this, people will start to come out the other side and get their confidence back."