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We’ve been reading how ill-prepared the world has been to deal with the COVID-19 pandemic. In an extremely short window of time, supply and demand signals went into uncharted territory, sending shock waves through the travel industry.

This is a fast-moving crisis. It has left governments and businesses in a state of ever-changing decisions. This is because in many parts of the world the pandemic continues to spread, causing damage that could take years to estimate and repair (to read the continuous re-assessments being made by the airports and airline industry, go here). But amidst the crisis, we are looking for that ray of hope. IATA says China’s domestic passenger airline market is already showing signs of recovery. IATA data shows that passenger yields on Chinese domestic flights booked during the first two weeks of March, are up slightly year-on-year and the load factors on domestic services were around the 60% mark. If China begins to return to normalcy in May, the rest of the world will likely follow, staggered by a few months. Exactly how many months is something no one can tell.

While there are many commentaries available on the sorry state of the travel industry, I will take this opportunity to go back in time and see what was happening before the pandemic hit us. This is also a good time to review where the industry was heading before the crisis and evaluate whether the priorities of the past will hold good in the future as well.

Travel & Hospitality industry priorities pre COVID-19

In my role, I am fortunate to interact with several leaders of the industry. These are practitioners who are dealing with the change themselves and preparing their respective organizations for tomorrow. I get to understand their business priorities and their outlook on how their organizations intend to cater to the needs of their customers and shareholders. At a high level, if I condense all these interactions and arrive at the top three priorities, they would be:

  1. Enhance customer experience – Customer experience took priority over everything else in the last 5 years. Travel brands went to great lengths to provide experiences that differentiated them from the competition. The maximum investments were made in the ease of purchasing and consuming services. Digital Transformation that enabled this, took center stage and the travel industry was at the forefront of this wave. But how will these strategies evolve in the post pandemic world? Read more on how to plan new customer experience strategy in a time of uncertainty
  2. Grow revenue through ancillary sales – In the past decade we have witnessed the core product getting commoditized and un-bundled. Margins were being delivered through the sale of ancillary products like baggage services, onboard entertainment, seat selection, room service, last mile connections, concert tickets, lounge access, meals, and hotel room upgrades etc. Most industry players were building capability to sell products that were traditionally sold by adjacent industries and un-bundling amenities that were previously considered part of the core product i.e. the seat/room reservation. Ancillary sales is fast becoming a profitable way to un-bundle value for customers and earn additional revenue on top of the basic reservation. Mindtree offers a cloud based ancillary merchandising platform that can help you identify and unlock opportunities to grow wallet share of a customer and revenue from each reservation.
  3. Improve operational efficiencies – While travel brands focused on top line growth, equal emphasis was given to improving bottom line efficiencies. This led to a huge breadth of initiatives: From advising pilots of fuel efficient ways of flying to tuning the HVAC systems in buildings to reduce energy spends; from changing the way travelers board the aircrafts to how they use toiletries in their hotel rooms. Even technology priorities shaped this objective in the form of more automation and legacy modernization initiatives. But what should the industry focus on in this area once the impact of the pandemic starts receding. Read more on this and how to leverage intelligent hyper-automation in the new normal.

Will these priorities change post COVID-19?

I believe these priorities will continue to command the attention of industry leaders. If anything, they will become even more important in the post COVID-19 world. The way travel brands choose to address these needs will differentiate the winners who come out of the crisis stronger than before.

Quality of customer experience will be determined by the ease of utilizing services. It will be the key factor that helps growth in demand. Travel brands will need to show customers that it is not only convenient but also safe to use their services. The goal will be to instill confidence in customers. Businesses will need to coordinate with other service providers in the travel value chain to ensure a seamless service. Service providers will leverage technology even more to deliver these services.

Travel brands will need to further focus on maximizing the revenue opportunity from the limited demand. This will come in the form of creating new services that will be relevant to the situation and finding new ways for travelers to discover and utilize these services. We have witnessed how airlines are re-looking at their seating plans. This will evolve further. The value proposition of selling an airline seat or a hotel room will shift towards hygiene and that would mean a change in attribute-based shopping mechanisms.

The crisis has unearthed a few areas that need to be more efficient. Customer service is one such example. The pandemic led to a surge in demand for customer service that most providers could not handle. With voice technologies maturing, they are apt to be applied to the customer service department. This will improve customer experience (shorter wait times) and prove to be cost efficient.

With no relevant historic data to predict demand and subsequently to optimize price, Revenue Management and Capacity Planning functions will be under pressure to deliver the right outcomes. What routes to open? What equipment to fly on these routes? Which hotels to open and how many rooms? How much staff to bring back to work and when? These will be key challenges for revenue management systems in the days to come.

To conclude, I believe as we come out of the crisis the travel industry will:

  1. Provide better door-to-door experiences that ensure the safety of travelers as well as the staff
  2. Maximize the limited revenue generation opportunities by introducing more value-added services and finding better ways of selling them
  3. Be efficient in their processes by utilizing automation and cognitive technologies

It cannot be emphasized enough that the travel industry will take some years to recover from the COVID-19 pandemic. But these years will come with several learnings. If those learnings are lost, all is lost.

However, we are a species that is quick to learn. We will put our new knowledge to judicious use and herald a healthy, new, resilient version of the travel industry in the near future. To learn more about how Mindtree can help your Travel brand emerge stronger in the new normal, click here.

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About the Author

Karan Rao
Senior Consultant & Program Director - Travel, Transportation and Hospitality business

Karan is a travel SME within the Travel Transportation and Hospitality industry group of Mindtree focusing on the UK and Continental Europe markets. He advises our customers on technology solutions to meet business needs and exceed customer expectations. His experience spans over 13 years with various Airline and Airline technology customers.

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