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September 30, 2008
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Upcoming
Events:
ATME CALENDAR
Oct 15-16, 2008 - Think Tank on Inbound Chinese Market - Chicago Westin
January 26, 2009 - Travel Marketing Forecast Lunch, NY Yale Club
January 30, 2009 - Travel Marketing Issues Lunch, Port of Miami
May 21-22, 2009 - Tentative dates of Annual Conference - Las Vegas
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ATME Marketing Issues Forum - September 23, 2008 - "Doing More with Less"
REVIEW
Marketing in the Downturn
By James Shillinglaw,
Editor in Chief, Travel Pulse/Modern Agent
Published on: September 29, 2008
(Editor's Note: This was published before the the $700 billion bailout plan was rejected by the House of Representatives and the market fell 777 points by closing Monday September 29th. But if you missed the lunch program this will let you know what what was discussed on the panel.)
As I write this Congress is poised to approve a $700 billion plan to rescue the financial services industry. Whether this ends up finally stabilizing the U.S. economy that our top politicians have been saying is getting close not only to a recession but a depression remains to be seen. Unemployment is rising, wages continue to be stagnant, and fuel prices are still high. All of which begs the question: How do you sell travel during an economic downturn?
Seeking answers to that question I attended the monthly luncheon of the Association of Travel Marketing Executives (www.atme.org) last week. The lunch featured a panel on marketing travel in a bad economy moderated by Susan Black, principal of Susan Black & Associates, a marketing consulting firm; and Pamela Johnston, owner of PJ Inc., a public relations and marketing firm. Panelists included Paul Wiseman, U.S. president of Trafalgar; Nico Zenner, general manager of Travel Bound; and Jeff Glueck, chief marketing officer for Travelocity. Much of the panel’s focus was on consumer and online travel marketing, but there were some salient points that anyone – including travel agents – can benefit from. I’ve listed a few below.
Find great deals and get them out in front of consumers. Glueck says that’s exactly what Travelocity is doing in a series of promotions, including one with the CBS television series “The Amazing Race.” Now you may not have that kind of marketing budget, but you can certainly tempt your clients with some of the great offers that travel suppliers are putting out these days (many of which you can find on TravelPulse.com). On the other hand, don’t go to the extreme of turning yourself into a discount outlet. “Don’t sacrifice your brand by becoming WalMart,” Glueck says. Be more like Target, where customers expect more but can still get offers that often match WalMart. Travelocity, for example, is featuring deals of up to 50 percent off from more than 4,000 hotels. Again, you may not be able to match that, but work to target offers to specific clients you think might be interested.
Don’t assume your clients understand the deal being offered. “In my experience in last 25 years, the consumer often doesn’t often understand the fundamental deal that travel retailers bring to market in the first place,” says Trafalgar’s Wiseman. “We can’t just create a deal over a deal over a deal, when the consumer doesn’t understand what a deal really is.” That means you need to explain exactly what kind of savings are being promoted, as well as the benefits of booking through tour operators and wholesalers. In the case of European escorted tours, for example, Wiseman says Trafalgar sells tours in U.S. dollars, which largely insulates the customer from what happens with the euro. “Our pricing for next year is actually looking quite good,” he says.
Recognize that prospecting for new customers may not work now. Wiseman says this is not the time to try out “wild and crazy” new prospecting strategies. Instead, you need to focus on your existing customers. “All of us have past customers, but very few of us are good at dealing with those customers,” he says. “Large campaigns looking for new customers aren’t working. So look at the customers you already have.” Wiseman adds that larger companies often have less ability to relate personally their customers (which I might point out obviously gives travel agents an advantage). Nevertheless, you need a great customer relationship management (CRM) system, Wiseman says, so you can look at the customers you have and find those that match the profile for specific travel offers.
Look for destinations that provide more value for your customers. Travel Bound’s Zenner says his company is seeing some shifts in the destinations being selected by customers. “Customers may go to a destination where they get better value for money,” he says. For example, Travel Bound is seeing more sales in southern China for the upscale market (and he emphasizes that China really is not just for escorted tours anymore). Zenner sees more opportunities and greater value in India, Turkey and Egypt. Travel Bound also tries to promote less-visited regions outside the major cities of Europe, for example. “Not everybody needs to be in Paris,” Zenner says. “So we send them to regions that are less visited…where they’ll probably get a better deal.”
Focus on the luxury market, which may be holding up better. So far (and this could change) the high end of the travel market is doing better than the upper middle or mass-market. For example, Glueck says high-end properties in Las Vegas are doing better than low-end resorts. Of course, I’d add the qualifier that even the high-end of the market could ultimately be affected, especially older luxury clients dependent on investment income as well as aspiring luxury buyers.
Use mostly tried and true marketing strategies. Black asked if the panelists were focused on new ideas to get marketing traction or tried and true marketing tactics. “Is this the time to be experimenting with different things?” she asked. “No one is going to sign on to crazy new ideas,” Wiseman responded. While there are major shifts in the way people hear about travel, he warns about ripping up existing marketing strategies. “I would caution people on throwing out the fundamentals of business,” he says. Glueck says 80 percent of what his company does in terms of marketing are things to make the existing product better, 15 percent are things they think are going to work and 5 percent are things that are “off the wall.” For example, he says Travelocity’s retention rates are up this year because it personalizes its communications.
Work with the budgets you have…don’t commit more money. Most of the marketing executives in attendance at the lunch reported their marketing budgets were down or at best equal. You need to look at what works and fund those strategies. “We have an accordion process,” says Glueck. “We see what’s working and what’s not working, and ask for more money for what’s working.” At the same time, I’d probably not decrease your marketing budgets significantly, just be proactive in figuring out what really works. You also will mostly likely have to do more marketing with fewer resources.
So how long will this downturn last? Several of the panelists said it could last as long as 18 months, so be prepared. It also may very well affect the cash cow of the travel business – namely the baby boomer market, whose savings and investments are being hurt by the downturn. So you’ll have to budget very carefully on expense and revenue side, according to Zenner.
At the same time, beware of too much media hype on just how bad the economy is and just how expensive travel has become relative to previous years. For example, many hotels have been introducing significant savings to offset the higher air costs of their customers. “We found 10 cities where flight plus hotel was only $20 to $50 more this year,” says Glueck. “Most Americans find travel essential to their lives. Plenty of people shouldn’t be scared by $50.”
James Shillinglaw, CTC
Editor in Chief, Travel Pulse/Modern Agent
jshillinglaw@pmgemail.com
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The
Association of Travel Marketing Executives (ATME) is
a 28 year old professional association made up of senior
level travel industry marketers representing all segments including:
airlines,
hotels and resorts, cruise lines, tour operators, online
travel, international tourist offices, CVB's, state and local
tourism
offices, car rental companies, technology providers, etc.
ATME is the only worldwide organization of its kind to provide members with an
ongoing forum for the exchange of creative ideas and effective marketing solutions.
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