Operators’ stories: Recovering from a crisis

While coronavirus may be the worst crisis we’ve faced in centuries, we have survived others that we can learn from. Ventrata asked operators about their experiences recovering from the Irish banking crisis, the SARS epidemic in Hong Kong, and 9/11

“As today, we knew instinctively that the world had changed,” Oliver Krieg says about the 9/11 attacks in New York. “In the immediate aftermath, business into New York came to a standstill. We saw dramatic drops everywhere in North America, but New York, being our top destination at the time, was obviously hit the hardest.”

Everyone old enough remembers exactly where they were on 11 September 2001. Al-Qaeda’s horrific attacks on the Twin Towers killed almost 3,000 people, traumatised a nation, and took a generation to war.

9/11 scarred the city economically. Hundreds of thousands of people lost their jobs in the following months — 3,000 of those in tourism. The insurance bill was $40 billion, and GDP for NYC was estimated to have dropped by $30.3 billion. Planes were grounded and tourism shuddered to a halt.

“Once people felt reasonably safe to travel again they wanted to show their support”

Now at Tour Hub, Krieg was working at Gulliver’s Travel Associates in New York at the time. He says over email: “The outpouring of love and support from around the world was amazing. It made me realise what New York means to people. The emails and kind words I received from colleagues and friends is something I’ll never forget.”

GTA had to lay off a quarter of their staff, but began to recover by the spring of 2002. They worked with other operators and hotels to promote New York, and soon the city launched an inspiring campaign, I Love New York More Than Ever, to bring tourists back.

“Once people felt reasonably safe to travel again they wanted to visit and show their support,” Krieg says.

Hong Kong saw similar effects when SARS arrived in the region from China. SARS caused a disease similar to Covid-19. It infected 8,000 people and killed 774. 299 of those who died lived in Hong Kong.

“This is not the same as during SARS,” Sandeep Mathur of Great Ocean Tours says over email. “The problem was limited to Hong Kong and the Canton area and not the rest of the world. Hong Kong businesses were hit badly but we all came back quickly when things resumed.”

Great Ocean Tours saw a huge drop in business as the region went into quarantine. Some of their staff had to take mandatory leave, but the office stayed open every day.

Signs of recovery for operators

Mathur says the signs of recovery are when the “number of cases don’t rise after regular travel starts, when airlines start to operate regularly with good inventory, when travel agents start to talk to clients about the destination and reassure them it’s safe, and when there’s plenty of deals in the market encouraging clients to travel.”

One Irish operator, who didn’t wish to be identified, says that diversification of their business was key to recovery after the Irish banking crisis of 2008. “We set up a new business in Dublin, invested in our people and training, overhauled our digital strategy, and integrated our sales across all channels,” they say.

“Use this time to innovate”

Operators

After the collapse of Lehman Brothers in 2008, Irish banks discovered they held a large amount of high-risk debt and began to fail. House prices plunged by more than 50 per cent, and 13 per cent of mortgage payers were at least 90 days behind on repayments.

Unemployment shot up to 15 per cent. The Irish state had to go to the European Commission, European Central Bank and the International Monetary Fund for a bailout.

Currently, the operator is carrying out market research on their brand positioning, and investing in R&D to identify new opportunities and a market re-positioning for when the economy begins to recover. They will have to align their headcount to demand when it returns. Most staff have been furloughed.

They say that tour operators should be “using this time to innovate, and to reinvent to meet changing demands.”

“We are reassuring clients that we are safe”

In Hong Kong, Mathur says that Great Ocean Tours are attempting to restore market confidence by pushing safety and hygiene. “We are reassuring clients that we are safe,” he says. “We’re telling them what we are doing to keep things safe, and we’re strictly enforcing these measures. We’re pushing more private than group tours to reassure clients that they are safe.”

It may be difficult for that message to cut through to people hoping to travel. We still don’t know how people are going to behave as the world exits lockdown. Will we travel to the same destinations? Will we fly or take the car? Will we visit the countryside over cities? What level of risk are we prepared to accept?

Like SARS, the collapse of Irish banks and 9/11, the coronavirus crisis has brought a transformative moment. But this time it has affected the whole world rather than specific regions. Tour Hub in New York is attempting to embrace the change while focusing on the core aspects of the business.

“It's important to focus on the customer experience and be as flexible as possible”

Operators

Krieg says: “My advice to others in the industry would be: things are changing, but the fundamentals remain the same. To stay successful — now, in three months, and in three years — it’s important to focus on the customer experience and be as flexible as possible.

“Make them feel safe, limit inconveniences as much as possible, and let them know we’re all in this together. It’s really an opportunity to start fresh and change the way we do things.”

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