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Responding to business slowdown
Tourism businesses should try to renegotiate the deals they have

Responding to business slowdown

These days, a common refrain when one interacts with practitioners in the tourism trade is “the business is not good o.”

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The factors that cause these comments are varied including a plethora of taxes on the hospitality sector.

One can also link it to the effect of a recent global event. We all experienced how the COVID-19 virus had a major negative impact on tourism and travel. In many such disturbances, tourism usually is among the hardest to be hit.

The comments I am referring to come from practitioners who are mainly small and medium-sized enterprises in the tourism industry. These are critical players in the supply chain. I am referring to your budget hotel, sidewalk restaurant, tour operator, tour guide or car rental. The suggestions below are designed to assist such small and medium-sized enterprises (SMEs).

Try getting a better deal: Tourism businesses should try to renegotiate the deals they have. A prime street office rental may offer a rent holiday in a pandemic, no?

They may, rather than lose a tenant they probably cannot replace in the short term. The same applies to equipment rental and all third-party contracts.

It may even be time to negotiate a delay in payment of rates to your local councils. Just remember, having something is better than nothing.

Cut the number of suppliers you use: In times of reduced demand, it is important to cut the number of suppliers you have. Work more closely with a smaller number who you can negotiate better payment terms or trading terms with in the future.

The more fixed assets a level of the travel chain has, such as vehicles, accommodation, overseas sales offices, the more they will be suffering.

For example, hoteliers will be desperate to fill rooms and will/should offer lower rates or higher commissions.

Then there is that thorny issue of your staff. It is difficult, but you need to look at staffing levels. That means everyone who is not absolutely necessary needs to be looked at regarding employment.

The staff members you are keeping will have to accept that you will only pay a percentage of their salaries or social benefits, such as medical/school fees.

Having said that, it is important to keep key staff so you can expand again once the crisis declines and manage the business through tough times.

Changing from full-time to a two to four-day week and giving key staff extra days off work greatly softens the possible 20 to 50 plus per cent wage cut you need them to take.

This is not going to be easy, so openly discuss things with them. A tourism SME cannot afford to be generous by keeping things normal and having 50 per cent of work/wages is better for them than zero per cent.

Communication and sales drive: Reduce any costly marketing such as TV or radio and focus on immediate calls to action, which have the lowest cost.

Google advertising costs should reduce as companies cut back. You still need to keep people informed about what they can do in a positive way.

If you have changed your booking policies for anyone booked for now and moved the dates, then use this as a positive reminder. You have to take control and not let potential customers book different things with different companies or countries.

Communication is going to be key to maintain business relationships with overseas tour operators as well as direct bookings.

You must have open communication with everyone. Reply to questions as quickly as you would normally and also keep them updated as to what is happening in your country or destination.

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Keep them informed because they do not know!

Plan your marketing by putting together a short to midterm plan. This could mean budgeting for a paid-for social media plan.

Your plan should, at the very least, include the actions mentioned above and an email campaign or newsletter to your existing direct and business customers.

Product development: This is an ideal opportunity to re-think the products and services that you are currently offering. If things were normal, you would be able to survey existing customers and get feedback from them to build profiles of what your clients like or not.

However, in the current times, you have no clients or at least very few, and so a slightly different approach will be needed. There are many ways of looking at this, but to keep it simple for you to be able to adapt, here are a few pointers:

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Work together: This is also an ideal time to survey your destination and think seriously about working with other SMEs in your tourism industry.

These could be accommodation suppliers, local or regional tour operators in another part of your destination, or someone else that provides an interesting experience that you can include.

By working together, you can match the larger national or regional tourism players and go to markets with new and exciting ideas and packages.

Some ideas can even be re-worked old ideas with a new and exciting twist.

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