Taking to the skies again after a long hiatus is tricky business, especially for those who considered themselves road warriors in 2019. The habits and patterns that were once so familiar have faded from memory and bit, to say nothing of he fact that many have all but forgotten how to tie a tie or don a shiny pair of dress shoes. But just like riding a bike, seasoned road warriors will quickly relearn how to pack in an instant, change a flight on the way to the airport, and secure a place to stay for the night in any overbooked metro area on the planet. But before we rush to recreate a future in the image of the past, perhaps the travel industry would do well to ask some tougher questions about the old normal, especially in the context of the business travel segment.
The potential return of business travelers, however incompletely or gradually, also presents an interesting set of challenges and opportunities for the travel providers who are eager to win back our loyalty and prove that they have differentiated their products and services during the pandemic. After all, now that many corporate travelers have effectively re-set their loyalty program status by holding down the couch for 18 months, a sizable portion of those who have a choice between airlines, hotels, and other travel brands may approach the market with fresh eyes. For this reason, as desperate travel providers scramble to win the loyalty of travelers with the highest potential lifetime value, road warriors will enjoy more market power than they ever have before. It is just a matter of time before a subset of this population translates their newly realized leverage into preferences, demands, and spending patterns. But which travel providers will be in the best position to benefit from these seismic shifts in the market? More fundamentally, which travel providers, if any, have developed effective strategies to capitalize on the changes in competitive dynamics that are bound to build momentum in the months and years ahead?
Sadly, if history is an effective predictor of future behavior, most travel providers will react too slowly and too incrementally to seize the opportunity that is now before them. Where a realignment of business models to market needs has been called for in the past, however, most travel brands adopted a wait and see attitude which created space for new competitors and perennial innovators to enter new markets, offer new and improved travel services, and ultimately soak up the lion’s share of the potential in the market. In the wake of 9/11, for example, as most airlines were reducing call center costs, trimming schedules, acquiring competitors, and rolling out self-services kiosks, companies like JetBlue were building an entirely new future. After the dust from the global financial crisis started to clear, mainline hotel brands were grappling with property management system upgrades, loyalty program partnerships, and opening new properties in high growth markets, Airbnb was erecting the architecture of the assets sharing economy. Notably, this was also the chronological soil from which Uber grew to strength.
Fortunately, understanding the historical tendencies of the travel industry will be in a better position to enact strategies and tactics that will enable their companies to lead the next wave of market-making industry disruptions. The next wave of disruptive leaders have probably already taken an honest account of where they stand with the customers and potential customers that are in the markets they serve. But for those who have not, asking and answering the tough questions about which specific products and services are truly differentiating in the eyes of consumers is a good place to start. Sadly, this exercise will likely help travel executives recognize just how commoditized their offerings have become. If the average business traveler had a hard time noticing the differences between the two lie flat trans-Atlantic products offered by two airlines prior to the pandemic, how much of a premium might they be willing to pay for their ‘favorite’ brand now that their travel loyalty status has been substantially diluted or reset to zero?
Attracting travelers and winning true loyalty depends on the consistent delivery of differentiated experiences, not merely the acquisition and maintenance of new or luxurious assets. By definition, differentiated experiences are not those that are offered to all travelers; they are delivered to a sub-set of travelers who share those specific and unique preferences. Travel providers must become expert at matching the unique desires of each traveler to the unique set of products and services they have on offer. Said differently, travel providers must not only have a rare collection of ingredients, cooking tools, and culinary skills in their metaphorical travel kitchens, but they must also become proficient and efficient at knowing which recipes to prepare and serve to each diner on any given evening. Delivering common travel services according to simple tier level is so 2019.
Even if most travel CEOs would argue that their companies have the ability to uniquely deliver personalized services via a mix of engaged staff and engaging digital interactions for a small subset of customers some of the time, the honest among them will readily admit that this is not a common capability in the travel industry. More importantly, all objective travel executives would admit that true personalization has never been delivered at scale to all travelers by any travel brand. But what if this is what success in a more competitive future demands? What if the business travelers of 2022, or even just a portion of the most profitable business travelers in the next decade choose to give their loyalty to travel brands that consistently deliver on this promise?
To thrive under these new competitive realities travel providers must establish new objectives, and develop the capabilities needed to consistently deliver against these objectives as quickly as possible. More specifically, travel providers must:
- Conduct a thorough and objective audit of unique travel capabilities and assets, including not just those under their direct control, but also inclusive of those offered by and through ecosystem partners. In most cases, this will reveal the need to radically innovate market capabilities and offerings.
- Complete a robust and detailed segmentation of the travel market to identify which travelers are the best match with current and future travel products and services. While this has surely been done before by most travel providers, it has rarely taken place with enough granularity to reveal distinct targets. This capability must also be woven into a robust continuous improvement program that constantly refreshes this analysis and makes its insights available to all part of the enterprise.
- Re-imagine travel loyalty in the context of target travelers and their unique needs. For most providers this will require the development of far more robust systems of insight collection, retention, and analysis. Loyalty programs should become two-way communication channels through which travel providers learn from and deliver to target customers.
- Refine front-line tools and systems to empower employees to uniquely satisfy traveler’s dynamic and unique needs. Consistently delivering value to travelers demands that employees have access to tools that make it easy for them to more deeply and personally engage with each traveler. Many travelers will continue to prefer self-service options when they are available, but all the travel systems and tools used to facilitate all person to person interactions must be optimized for genuine and authentic personal connection.
In isolation, none of the above will guarantee success. That said, each will bring incremental improvement to the travel experience which will ultimately improve both top and bottom line financial performance. But any company that can effectively and efficiently achieve all of the above will probably lead the industry out of its current malaise, and will be better positioned to capture and retain a larger share of the business travel market as it continues to grow back to full strength.
The 2021 holiday travel season, though mostly focused on leisure travelers and markets, will reveal which travel providers are embracing the changes that are needed to reinvent pieces of travel industry. IBM surveyed more than 13,000 consumers around the world to understand how the ongoing pandemic is impacting holiday shopping and travel plans. Attend the “What do holiday 2021 travel plans reveal about the state of global travel recovery?” roundtable which takes place at 11:20 on the 1st of December (World Aviation Festival Event), to learn more about these findings, and to discuss the continued recovery and growth of the business and leisure travel segments.