Recovering from the effects of Covid-19
Helen Scullion, Consultant
4th February 2021
* This article was written as we were looking forward to covid restrictions being lifted
How Covid-19 has affected travel, tourism and hospitality and what companies can do to prepare for the easing of restrictions.
It’s unarguable that travel, tourism and hospitality (TTH) has been hit hard by the global impact of the pandemic. Widespread government restrictions and the destruction of consumer confidence have left the entire sector facing unprecedented challenges.
At Powered By Data we have a deep understanding of the TTH industry and we have been helping our clients to navigate this uncertainty. By April 2020 our TTH clients saw bookings reduce by between 60% and 70% on average compared to 2019. Within a month of lockdown we saw calls to travel and hospitality clients drop by 40-60%, with a substantial shift to non-sales channels. The industry is estimated to have lost £37bn in 2020 alone.
The new wave of lockdowns and increased quarantine requirements are reducing hopes of a Spring recovery in 2021. But companies are adapting to get through these tough times. Those firms that have the resources, tools and techniques to get through this period will reap rewards. There will be better days ahead – we know that people’s desire to take a holiday abroad or to travel to visit friends and family is stronger than ever. People are continuing to plan holidays at home for the time being, tourism and hospitality in the UK is reporting strong domestic demand.
We are supporting firms through their efforts to prioritise, reduce inefficiency and take the right preparatory steps for a recovery in the second half of 2021. We are seeing much broader requests for our data services, with companies taking a more creative and ‘whole of business’ approach that goes well beyond the typical fare of econometrics and insight-led CRM. We’re also working with businesses who want to use data to find the weak points in their online experience and to enable a more optimised, end to end and engaging customer journey. We’re using our expertise in data and insight to help firms to make sure they’re the first choice when customers are ready to book that well-deserved holiday.
Broader Applications for Econometrics
Clients are applying a new focus to the econometrics studies that we run on their behalf. Whereas companies once focussed primarily on media ROI, they now take a much broader view. Our studies are being used to help firms develop an understanding of elastic costs, to drive cost reductions and develop much wider business insights than before. As an independent 3rd party providing the measurements framework for clients and media agencies, we are well positioned to expand our remit to support these strategic approaches.
Econometrics models are complex beasts which need to consider a wide range of expenditures, promotions, pricing, economic conditions, consumer research measures and returns to be effective in their future forecasting roles. But when it comes to delivering the campaign optimisation tooling into clients’ planning teams, the functionality has always focussed on optimising for a campaign response and allowing a forward prediction to update revenue forecasts. These tools are now having some of the underlying levers exposed to enable much wider cost optimisations to be made, and to allow a more to a more integrated view of marketing activities which better leverage the halo effects of other actions. For example, working to make PPC Brand activity more aligned to TV spot advertising, which drives more efficiency in the overall mix.
Importance of Data and Insight
During times of budgetary pressures, the organisations that thrive are those that leverage their data and insights teams harder than ever. Marketing can often be accused of focussing on filling the top of the funnel for new customers with various enticing and margin-eating offers whilst missing severe retention rate issues further through the funnel. We are seeing that particularly strongly with marketing efforts now needing a reported payback and associated confidence levels being submitted before approval: “this activity will cost £X and we are 80% confident it will drive Y and 90% confident it will drive Z”.
This new drive for increased pre-campaign confidence means clients need to have more and more of these skills inhouse. Campaign planners will need to have strong data and analytical skills to calculate and communicate the performance expectations. All activities, from pricing and promotions through to ATL advertising will need to be understood in terms of their impact to the overall bottom line and all of the associated halos and efficiency measures – COVID-19 will necessitate a new level of rigour on business expenditure and accountability with an understanding that marketing activities are much greater than the sum of their parts in terms of impact.
This renewed focus on data, analytics and business insight across all disciplines is already causing an increase in the re-emergence of the Chief Data Officer role within organisations, coming out of the shadow of what became an IT role into a role sitting across IT, marketing, product and finance divisions driving the efficiency of viewing the entire organisation through the lens of data driven insight.
Improving the Online Experience
Powered By Data leverages this organisation-wide level of insight to shine a light on facets of operations that are often shrouded from view.
For example, we were able to quantify the effects of a poor web journey to one client, showing the direct effect of a challenging basket completion journey on the call centre. In building an econometric model to describe the effects of all drivers, we were able to see that increases in web traffic were related to a much larger than expected increase in the proportion of calls to the sales lines. The effort to drive customers online to purchase was being wasted, as the customer eventually ended up using the call centre to complete.
Not only could we show how this effect was manifested, but we were also able to provide a range of recommendations to resolve it, and forecast the magnitude of the positive effect these recommendations would have on the call centre and total bookings.
Planning for recovery and growth
As the industry starts to recover there needs to be a realisation that volumes will return before yields, but we are also likely to be looking at a resetting of the base level of business for many in the sector. Given the new norms of meeting via Teams/Zoom, etc. we can expect to see a level resetting in business travel and overall travel volumes may only come back to 80-90% of pre-COVID-19 levels.
The consumer TTH sector is in a uniquely positive position as we move out of COVID-19, with the top response in multiple surveys being a wish to take a holiday. However, there is a limited pool of consumers who are willing to travel abroad as soon as restrictions are lifted and capturing that spend will be hard fought by all operating in this space.
In these uncertain times, one thing is clear - flexibility and fast adaptation will be key to success as volatility will remain high during the recovery.
Expert use of data will be critical to ensuring that the firms have the understanding and insight they require to make those decisions, and position themselves for success.
We would love to speak to you about how Powered By Data can help your business navigate the uncertainty which COVID is still causing. Whether that’s through Econometric Modelling, building or refining your CRM strategy, creating a Single Customer View to improve efficiency, targeting of your Direct Mail or even helping you to recruit the best data talent for your in-house teams. Please get in touch at firstname.lastname@example.org.