Following the last financial crisis, the Hospitality Industry experienced nine consecutive years of growth. We fought back against competitors such as Airbnb with improved guest incentives, enhanced guest experiences and structural change. As we looked toward 2019 we were cautious, but optimistic. We felt good.
Then, despite our best efforts we were hit by the federal government's shutdown. Now, we find 2019 Q1 ADR and RevPAR rates under siege. And with travel plans and guest accommodation plans thrown into disarray by absentee TSA employees and cancelled flights, we must redefine our communication and guest acquisition plans for 2019.
Hospitality success in 2019 will be defined by the outreach seeds we plant now. And by the fruit - in the form of rekindled vacation and business meetings plans - those seeds bear later in the year. Now is the time to communicate and remind them of the guest experience awaiting them.
Last week, Atlanta Airport's Twitter account suggested travelers give themselves ‘3 hours to clear security.’ The Hospitality industry has been dealt an unexpected blow. Our plans and regression analyses and forecasts were slammed with uncertainty as large portions of the federal government closed up shop. In Boston, I watched as my 2019 forecasts dropped. Projected revenue slipped with the first ripples of the shutdown as clients trimmed expenses. After December 22, a swelling tsunami of travel inconveniences rolled forward as TSA lines grew, National Parks closed, and flights were cancelled. Our clients' reservation calculations slipped.
We are accustomed to negative externalities, as wise economists call such events. We react to them time and time again as we:
- Define new ways to entice guests to stay at our properties
- Work to increase travel reservations and enplanements
- Mine our CRMs to better target guests with reward and incentive programs
- Register new (and future) guests
- Put heads in beds
- Enhance the guest experience
- Generate enough revenue to pay our hard working employees
REAL WORLD IMPACT ON THE BOTTOM LINE
With unpaid TSA workers calling in sick, time spent in travel lines is approaching time spent in the air. Last week, Atlanta Airport's Twitter account suggested travelers give themselves "3 hours to clear security." It's not just Atlanta. Houston's George Bush Airport closed its Terminal B security checkpoint last weekend due to TSA employee absences. Without pay, who might blame TSA staff for staying home - or taking time to look for a more secure job.
But it's more than tales of inconvenience. It's facts that tell the real economic story. Facts like:
- $100 Million of Output Lost Each Day: According to U.S. Travel Association's preliminary estimates, the shutdown results in lost economic output of more than $100 million a day with losses spanning direct travel and indirect output.
- 15% Travel Cancellations: MMGY Global's recent study indicates over 15% of domestic travelers have cancelled a planned trip due to the shutdown.
- $20 Million At and Around Parks Lost Each Day: AAHOA President and CEO Chip Rogers recently stated, "Visitors to our parks spend an average of $20 million per day in neighboring communities, but with the parks closed, that money stays home."2
- $25 Million Lost Per Month for One Airline: Delta CEO Ed Bastian suggested the shutdown would result in a reduction of monthly revenue in the neighborhood of $25 million. But it's bigger than that. With the relationship between enplanements and local commerce we can expect an even greater challenge to local hoteliers. Consider this: if we divide the DOT's average airfare cost of $379/ticket and add a little kicker of 20% for fees into Delta's monthly loss of $25 million, we are left with a SWAG of 54,000 cancelled tickets. Not an exact calculation, but useful for our discussion today. Then, when we remember the FAA's 2015 Economic Impact Report suggests each passenger generates $631 of economic impact when they travel, we can multiply the $631 in local economic impact by the 54,000 SWAG of cancelled flights we sum to a localized monthly spending loss of $68,759,571. Much of this loss in local spending is snatched from hoteliers and the pockets of those in the hospitality industry. And remember; this is the impact of just one airline!
So Q1 looks rough. For airlines, and destinations, and hospitality and agencies like ours as we serve you. And as the shutdown lurches forward it's going to get rougher. Now, let's think. What must we do to respond to this problem? We must act to help ourselves.
THE TIME IS NOW
If we are to believe Travel + Leisure's annual review of over three million domestic trips (and why wouldn't we believe them - those folks are smart!) the best time to book travel is 70 days before a trip. The behavior of many travelers clusters around this point of datum. As Q1 trips are cancelled, future opportunities take their place. Now is the time guests, and vacationers, and those rescheduling meetings are planning their rescheduled trips. Trips that will occur about 70 days after bookings.
And if travelers are considering future plans according to the optimal behavior suggested by Travel + Leisure, we are offered a rolling 70 day window to change our outreach plans, capture the attention of displaced travelers, and generate reservations in Q2 and Q3.
We have about two months; the time it takes to get a digital media campaign rolling.
As a full service agency, Fuseideas strategists are big believers in fully integrated campaigns spanning digital, OOH, print and broadcast. Now, however is not the time for the long lead time and long media flight plans associated with integrated campaigns. Now is the time to be nimble and move quickly; quicker than your competitors.
Now is the time to promote reward programs, to offer discounts, to share incentives and unwind aspirational storytelling via rapid deployment marketing vehicles such as inbound marketing, social media, native advertising, digital ads, paid and organic search, and mobile communications.
Now is the time to persuade travelers and guests to think in terms of rescheduled trips; not cancelled trips.
Now is the time to update keywords, review paid social vs. paid search cost per booking, optimize digital media spends, recalibrate digital messaging, present native content, and secure digital media inventory.
Now is the time to delight those presently inconvenienced by the shutdown-induced travel woes; our guests.
Whether with Fuseideas, or with your AOR, or with you internal team, now is the time to craft and deliver digital incentives, promote, reach out and engage.
Your 2019 depends on it.
1 Robert Burns, "To a Mouse"
2 Hospitalitynet's 1/11/19 article