It is a fact that the global travel industry is one of the, if not
the, hardest hit industries in the COVID-19 pandemic. At
the peak of the lockdown measures across Europe, several
countries experienced a staggering 99% decrease in bookings
on popular accommodations sites such as Airbnb, Expedia,
and Booking.com compared to 2019. As countries shut
their borders to protect their citizens, global tourism came
to a complete halt. This hugely impacted the entire tourism
ecosystem, resulting in a significant drop of movement and
occupancy in the airline and hospitality industries.
Contrary to the hopes of the industry, the traditionally thriving
summer period was not spared by the effects of the pandemic.
While the numbers did improve compared to the early days
of the pandemic, primarily as a result of local tourism activities,
they were still significantly below the levels in 2019 as the
world adjusted to a “new normal”. However, as new lockdown
measures and travel restrictions have been introduced in
several European countries in recent weeks, the industry is
experiencing another notable decline in bookings.
The big question is—what will tourism look like in 2021
and beyond, and what should be the focus of the airline
and hospitality industries?
The values of loyalty in a crisis:
In order to determine their focus, it is important for the
airline and hospitality industries to understand the impact
of COVID-19 on their consumers. To help these industries
prepare for the new phase of the pandemic, our Global
practice published an article on “The values of loyalty in
a crisis for the airline and hospitality industries”, which
emphasizes the need for a shift in focus from “serving” to
“adding value” for (potentially) loyal consumers. With this
thought in mind, the article presents three main insights
that are very much relevant in Europe, which we
summarize below:
Research showed that the top 2 values of airline and hotel
loyal frequent travelers are sharing with others and trying
new things. In order to re-engage these travelers in the new
normal, the industry should increase their focus on reward
and loyalty programs with an emphasis on appealing to
these values of sharing (digitally) with others and trying new
experiences. We are already seeing some great examples of
this, including new offerings such as online travel experiences
to a dream destination, monthly subscriptions for hotel and meeting rooms, staycation travel tours between hotels,
walking food tours and providing loyal customers with a
significant discount on their next reservation.
As the industry shifts towards the new normal, there is a new
value that is of great importance—the feeling of safety. In line
with that, the vast majority of airlines and hotels are focusing on
making travelers feel as safe as possible through initiatives such
as improving their sanitizing and housekeeping procedures,
making it mandatory for employees to wear protective
equipment, providing travelers with complimentary cleaning
products, screening employee and traveler temperatures,
and disclosing travelers and employees that have been tested
positive for COVID-19.
Finally, as more and more interactions are moving online,
airlines and hotels are expected to be more digitally-enabled
than ever before, leveraging this digital transformation to
surprise and delight their loyal travelers by offering connection
points to their friends and family back home. We encourage
the industries to find points of differentiation for digital
experiences and increasing positive interactions with the brand
through initiatives such as making better use of social media
to inform and inspire travelers in order to develop stronger
relationships, increasing email contact to inform travelers of
safety protocols, shifting the online focus towards domestic
target groups, and making sure that the website is always up to
date with the latest COVID-19 status (i.e. cancellation policies,
safe local experiences).
Staying focused in times of uncertainty
It is clearly evident that the airline and hotel industries are not
sitting and waiting for the pandemic to end, but are proactively
adapting their current business models and rethinking how
they best can adapt to the changing environment. We are
happy to see that the industries continue to invest in making
these changes in response to the challenges that they are
facing. With the enclosed article on “The values of loyalty in
a crisis”, we hope to provide the airline and hospitality
industries across the globe with additional insights on how
they can best adapt to the new normal and remain focused
in these uncertain times.
Do not hesitate to get in touch with me to further discuss the
impact of the COVID-19 pandemic on the airline and hospitality
industry, the values of loyalty during these times, and how
companies can best adapt to the new normal.
Kind regards,
Fleurine Mijinke
Typically delighted by a complimentary beverage in the lobby
during check-in, hotel guests of the future might be even more
excited to be treated to unlimited hand sanitizer. Let’s face it,
the COVID-19 pandemic has heavily impacted the travel and
hospitality sectors. Hotel occupancy is down 42% year-over year (YoY) with roughly 80% of hotel rooms empty. Air travel
demand is forecasted to fall 48% for 2020, with a projected loss
of $300 billion.
With our present reality looking grim, brands are shifting focus
to their action plans coming out of the pandemic. While nobody
knows exactly what these new realities will look like, businesses
will actively work towards stabilization and recovery, which
in travel and hospitality means ensuring that a brand’s most
valuable customers return as quickly as possible. It’s too early
to base long-term recommendations on current transactional
trends and customer actions, so instead we’re monitoring
the underlying motivators of human behaviors, actions, and
beliefs—their values.
Our proprietary Values Compass is built on an algorithm that
uses targeted questions to map humans against eight cardinal
values: ambition, trying new things, curiosity, belonging, caring
for others, control, and learning new things.
Our recent analysis explored how values have shifted
during the COVID-19 pandemic and found that values are
the aggregate of our experiences, are slow to shift, and are
therefore a good way to predict people’s long-term behavior.
Organizations that can identify, communicate, and act upon a
brand purpose that overlaps with the values of their customers
will be better positioned to thrive as we enter a new normal.
And why does this matter? Because companies who deliver
on human values Elevate the Human Experience (EHX™),
and EHX™ leaders are twice as likely to outperform their peers
in revenue growth over a three-year period6. In hospitality,
EHX leaders across price tiers captured more than 30 percent
higher revenue per average room as compared to low HX
performers within their category.
With that in mind, we looked at the values of airline and hotel
customers from a snapshot taken June 02, 2019 one year
ago—a time that provides an accurate read on baseline core
values for customers traveling before this pandemic. Brands
can start thinking about how to recapture customers by
understanding and appealing to their deeply rooted values.
Since these are the travelers that will likely be returning, we set
out to learn what they care most about. We specifically looked
at frequent travelers who belong to loyalty programs. This
group was categorized as those that took 5+ air trips and had
8+ hotel stays, respectively, in the last 12 months rolling back
from June 02, 2019.
So, what did we find?
Airline and hotel loyal frequent travelers, who often travel for
business, are largely the same group of people and as such
have values that mirror each other. Unsurprisingly, we found
that both groups of loyal customers have nearly identical
values, and in particular aligned with the same top 2 values:
sharing with others and trying new things. This group values
sharing their experiences and thoughts digitally with others and
are also motivated by trying new technology and experiences.
Aligning to values will be a critical ingredient for success as
airlines and hotel brands focus on re-engaging their loyal
frequent travelers. We believe that an efficient way to do this is
through rewards and loyalty programs. As an early response to
quell anxiety and maintain loyalty, most brands chose to extend
the expiration date on program status, quickly becoming the
ubiquitous answer to initial COVID concerns. With the fear of
losing status waning, rewards programs and messaging can be
re-aligned to what customers truly care about—implementing
innovative features that deliver new types of incentives that
appeal to their values and reward these customers for their
loyalty. Modifications to rewards programs also often require
lower investment into organizations’ existing infrastructures,
as opposed to complete overhauls reserved for long-term
strategic shifts.
Although we believe that core values will hold in the long-term,
there is an additional element that cannot be overlooked in
helping with the return of these avid travelers as we enter a
new normal—the feeling of safety.
In a recent survey, 78% and 87% of frequent hotel
and airline travelers, respectively, said that an
advance email outlining new cleaning practices
would be very or somewhat important in making
them feel more comfortable resuming travel and
other activities.
Rewards programs have the potential to play a significant
role in recovering loyalists. They appeal to travelers’ desire
to feel valued and can help brands build trust by enhancing
the communication and actions necessary to put customer
well-being and safety first. Embracing these tenets, hotels and
airlines can take a two-pronged approach—adding loyalty and
safety features designed to recapture this loyal customer base
during the post-COVID-19 travel ramp-up period, and adding
features designed to keep these customers happy once travel
settles in to a new normal.
The value of ‘sharing with others’ makes loyal
travelers want to share experiences and connect
with the people who aren’t with them.
In a post-COVID-19 environment, hotels and airlines will
be expected to be more digitally enabled than ever, but can
still surprise and delight their travelers by using this digital
transformation to offer frequent loyal travelers connection
points to their friends and family back home. As travel habits
return, this can be a very human point of differentiation—
helping organizations foster strong relationships with guests
and increase positive interactions with their brand.
Additionally, the value of ‘trying new things’ creates
an opportunity for hotels to continue doing what
boutiques have done well in the past—offer unique
experiences that are tied to the local culture.
Well-educated concierge and desk staff should be ready to help
returning guests experience all the location has to offer. This has
a compound opportunity to reinvigorate local economies and
small businesses in the area and ensure your guests are treated
to new experiences they are unlikely to find elsewhere.
Airlines may consider adopting a digitally focused, community building mindset and structuring reward program applications
to be less focused on individual customers. Building on the value
of sharing their digital experiences, loyalists are likely to want to
share rewards and would potentially be interested in working
toward team- or family-based goals and benefits. This approach
not only applies to the rebound period, but also the long-term.
But what about frequent travelers who do not yet belong to
rewards programs? To further understand broader groups of
travelers, we looked at ‘non-loyal’ frequent travelers and found
that they too value sharing with others and trying new things.
Similar to the loyalists above, this group expects a certain
level of safety when returning to travel. When organizations
develop strategies around their loyalty members, building
features around sharing, trying new things, and improving safety
standards and messaging, they will also be appealing to this
crucial group of ‘non reward member’ frequent travelers.
Focused reward feature design can play triple duty—
bringing loyal customers back quickly, enticing
frequent travelers to enroll in rewards programs,
and building consistent loyalty by rewarding these
customers with perks that meet their values.
So now what?
If there is one thing that’s certain in this uncertain
time, it’s that the human experience will likely position
organizations to better meet needs and ultimately stand
apart from the competition. While it remains to be seen
just how long it will take for business to feel ‘usual’ again,
when organizations develop strategies to re-engage
their most loyal customers they should make an effort
to deeply understand their values. Customers will expect
to be taken care of and feel safe in the new normal
and companies who best deliver on this expectation
will be positioned to capture share as travel returns.
Organizations who align their rewards programs with
customer values and consistently deliver feelings
of security can incite continued loyalty and capture
frequent travelers into the reward program and overall
brand fold. We believe this values-based approach can
help travel and hospitality brands respond, recover, and
ultimately thrive in the face of our new realities.
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