The coronavirus aka COVID-19 pandemic continues to spread with no signs of fading away. Preventive measures taken by the public sector and by global industry are already having widespread effects. Most of the businesses around the world are facing many challenges and lower demands of their services & products. Meanwhile, the Organisation for Economic Cooperation and Development (OECD) has said the global economy may now grow at its slowest rate since 2009.
With the COVID-19 virus spreading to dozens of countries globally, the travel industry is working hastily to both prevent the spread of the virus and navigate through heavy economic uncertainty & slowdown. Now, with the globalized world going into partial or complete lock down over the Covid-19 pandemic, startups in the travel sector are facing a huge stress test as well as immediate interruption to business because public health concern has increased and entire populations are encouraged or even forced not to travel.
Travelers are reconsidering travel plans both to prevent infection and avoid being quarantined. Due to this, airlines are also facing a huge fall in bookings. Airlines have ceased flights to the hardest-hit areas and reduced capacity elsewhere. Similarly, many hotels are empty or facing declining fall in occupancy; conference organizers are losing major events, local tour operators have far fewer customers due to travel avoidance of customers as experts say that there’s no sugar-coating: It’s rough out there right now. Lean times are inevitable for the travel industry - that much is for sure. But among the furrowed speculation and fearful reports, some of the startup founders have been busy formulating ideas and plans catalyzed by the recent crisis.
No to non-essential travel
With restrictions on travel and large business events, many startups, IT majors and corporates have ruled out non-essential domestic and international travel. In a statement, IT major Wipro said: “Wipro has suspended travel to and transit through mainland China, including Hong Kong and Macau, until further notice. Employees have also been advised to avoid non-critical travel to Singapore, South Korea, Japan, and Italy.” As many companies have asked their employees to work from home, it has caused decrease in travel. Asheesh Chanda, CEO of digital wealth management startup Kristal.AI, said all necessary precautions as advised by the government were being taken. “Kristal.AI operates in three locations - Singapore, Hong Kong, and India. Non-essential travel between offices is currently discouraged. We have asked all employees across locations to work-from-home."
In the same way, many travel tech companies have seen a spike in cancellations. In general the impact is heavy. While some have stated that demand is dropping off a cliff but it’s not as bad as they thought — but it is definitely heavy. Bookings are down by almost half It’s seeing similar changes in booking behavior. Advanced booking has come down drastically. TravelPerk told that it’s currently dealing with a drop in business globally of around 50%.
The co-founder and CEO of TechCrunch, Johannes Reck said, “This is the most severe shock that I’ve seen in the last 10 years. The irony of Europe is that we had a fantastic start to the year, consumer sentiment was high, and then it fell off a cliff a few days ago.” An airline trade group said last week that the industry will lose as much as $113 billion in sales because of the coronavirus pandemic. Also, Booking.com withdrew its forecast, citing the worsening impact of the virus on travel.
Here's some of the useful tips and tricks for staying afloat in these tough times –
Look for bright spots
If your startup has a global focus, look for bright spots of travel demand. Not every area is affected by travel restrictions and flight bans. For instance, depending on your business model and market, one can switch to targeting short journey. Another tactic is to target travelers from areas less affected by the virus. Take a methodical look at current travel conditions and compare that with your target demographics. Wherever you find opportunities, you’ll need to balance pricing with market share and thus customers can be attracted to use your services.
Also Read: List of Top Travel Startups in India
Work on your expertise
The travel community has a unique perspective with many “boots on the ground” i.e. contacts in different places around the world. So ask your suppliers, distributors, partners what is happening on their end. So, by gathering information from them, your expertise can be utilized to provide customers what they are actually needing at this time. This can help with lowering cancellations while also keeping your team informed on the virus.
Create your USP
Travelers now face uncertainty and lack clarity over when, where, and how to travel due to constraints. If your startup has a unique selling proposition that addresses some of these challenges, work on it! Try to be creative and see how you might be able to apply your product to add new or unexpected value to the current global situation. Or, perhaps there are aspects of your business model that could be improved a bit to increase relevance in these circumstances.
Partner up with others
Now is the time to get creative with partnerships and building relationships. By joining hands with other startups which are also facing the same challenges, new solutions can be found to deal with current circumstances. As you consider potential partners, look for those who may be especially hard in this climate and needing cost-cutting or short-term revenue.
It’s important to remember that no crisis lasts forever and to attempt to look to the future. This isn’t the world’s first recession and it won’t be the last. It’s not the world’s first pandemic and it won’t be the last. The key for entrepreneurs is to keep a cool head about you, don’t do anything and adopt a war footing while your company struggles through choppy waters for 12 to 18 months in the wake of this pandemic. When the crisis recedes and the courts reopen, your company will need to provide an accounting of its obligations and answer for any it has fallen short on in the meantime.
Must have tools for startups - Recommended by StartupTalky
Subscribe to StartupTalky
Get the latest insights delivered to you right in your inbox