“We Made It: What’s Next?”
European Travel Companies Brave Staffing Shortages Amid Burning Demand
Some were skeptical about attending Phocuswright Europe, and with such long delays, cancellations, Covid, and other travel headwinds who could blame them? But upon arrival at Phocuswright Europe 2022 in Amsterdam June 27, concerns were pushed aside as the industry bathed in travel’s crazy comeback. The European online travel industry reunited in person at Phocuswright for the first time since May 2019 and that took some of the sting out of the current situation. Everyone got to share their travel experiences and opine on these ironic times as the industry muddles through one more crisis. After a frightful pandemic, things are now TOO GOOD, demand is TOO HIGH and there are just TOO MANY CUSTOMERS.
Traveling to Amsterdam, many had first-hand accounts of their own trials and tribulations in making flights or locating a rail ticket to get to their destination. And while solutions might be hard to find right now, this was the right place to at least discuss what could and should be fixed, and what should just be waited out.
The theme of Phocuswright Europe was “Fast Forward: A Strong, Sustainable Future,” and while sustainability was an important topic for many speakers, some near-term issues took precedence. Labor shortages, less money invested, high prices, and an impending recession loomed large, but couldn’t dampen the joy of lifted restrictions and a vibrant (mostly) travel market. Consumers have been eager to travel, first domestically and now, because they can, internationally. If the industry could survive this last crisis, it can survive them all.
After disastrous losses in 2020, travel companies in most sectors are building their businesses back to 2019 levels, some even exceeding it. Despite the rebound, however, the focus has changed.
There is no “new normal,” only a “next normal,” as Tamur Goudarzi Pour, SVP, Channel Management, Lufhthansa Group and CCO, Swiss Airlines pointed out. Money isn’t flowing like wine anymore, making it harder for start-ups to fund the next great idea. Investors have become more conservative due to recession fears, and near-term profitability has become the main focus versus risk-taking and longer-term investments.
“Exits are going to be very difficult,” predicted Christian Saller, General Partner, HV Capital, except for “self-sustainable, strong, profitable businesses.” The good news, he said, is that the travel industry already went through severe cost-cutting measures and is better positioned for a recession than other ecommerce segments. Who is poised to do well? Lakestar Partner Christoph Schuh is bullish on fintech, B2B infrastructure, and asset-light businesses.
“We Made it” What’s Next?
“We made it,” said Giancarlo Carniani, GM of ToFlorence Hotels. “We have to feel very proud.” But the hotel industry still faces tight labor costs and now, with rising fuel prices, rates will likely continue to rise. But don’t expect robots to take over anytime soon. “I quit” if we substitute the human touch with machines, joked Fernando Vives, CCO for NH Hotel Group. “This is a people industry.” His point was that virtual meetings technology is no substitute for the real thing, but certain processes, such as booking small meetings, can and should be automated.
“Ramping down has been hard,” admitted Lufthansa Group’s Tamur. “Ramping up has been even harder.” He casted an industry “on the edge”. “Demand is there but can we get our act together?,” he implored. Airlines can’t even rely on getting the parts they need to build new planes, so it’s hard to plan. Airlines must be nimble and flexible. He expects some stabilization after the peak summer season is over. “Expect the unexpected” is his wise advice.
Fix the Plumbing First
Technology is key to solving – or at least dealing with – the industry’s problems, according to speakers on the Pundits and Predictions panel. Data is everywhere, but making it meaningful and insightful remains one of travel’s biggest challenges, according to Timothy O'Neil-Dunne, Principal, T2Impact Ltd. The industry still has a long way to go in terms of connecting travel silos and offering a frictionless trip experience.
“The plumbing is still pretty bad…let’s try to fix that,” pleaded Timothy Hughes, VP Corporate Development, Agoda. Airports have become a horror story. “The airport is broken,” added Hughes. Of the top 200 airports, 95% are slot constrained. Yet travel keeps happening despite its challenges. “The desire to travel is unending,” said Viator founder Rod Cuthbert. Is it “rough around the edges?” Sure, but “I am positive the industry can work this out.”
And finally, back to the theme on sustainably. With so much else happening, panelists agreed it is getting harder to keep the environment top of mind. The big challenge remains to be “raising global awareness,” said Sally Davey, CEO Travalyst, and “bringing sustainability to the mainstream.” “Fragmented approaches… are confusing to users,” said Sebnem Erzan, head of Travel Sustainability, Global Enterprises, Google. She is calling for more standards for measuring sustainability efforts, and for the process to be easier on the user. These thoughtful choices “should be imbedded in the journey and effortless.”
The discussion at Center Stage Phocuswright Europe, which included Self-Sovereign Identity (SSI), intermediaries, destinations, Asia trends, ground transportation, corporate travel, tours and more, was unique to the times. The industry jumped out of one fire into another, and travel executives are optimistic about the continued rebound, but cautious about what high prices in a recessionary economy could mean in the future.
“We all knew demand was going to come back,” said Andy Washington, GM Europe for Trip.com Group. “Let’s not be too greedy” in terms of setting prices. It can certainly backfire, but no signs of weakness yet.
So far Expedia hasn’t seen demand fall off. “I just believe that people have a deep need to travel,” explained Ariane Gorin, president of Expedia for Business at Expedia Group. “Even if there are headwinds and inflation and the like, people will find ways to travel.”
The industry has survived the worst, but the bumpy ride isn’t over quite yet. Yet industry leaders are prepared for whatever comes their way. The unshakable traveler population is counting on it.