Optimize Profits for Travel Companies: During and After Crisis
Though coronavirus has brought upon the travel industry a modern “dooms day”, without clarity as to when things will get back to normal, it´s important to keep calm. Though this crisis is quite different as previous cyclical economic recessions, modern humanity has a successful track record bouncing back from adversary. Though this crisis will have its temporary impact, it is temporal. In the meanwhile, it's important to optimize profits for travel companies to balance out the extreme loss of revenue.
Despite the fact that we are not receiving clear answers from the WHO, CDC or our governments, it´s important to remember that many of you still have travel itineraries booked for July – December of this year, and there is plenty that can be done to optimize profits during the crisis and reap the rewards once COVID-19 will be spoken about in past tense.
Efficient Marketing Strategies
Customer acquisition in the travel industry is usually a high marketing expenditure. It´s hard to predict how your potential customers´ finances will be like once the Coronavirus travel ban is lifted. Fishing for new customers might be tough at the beginning.
However, you will most likely be more efficient re-engaging your existing and past customers with unique promotions for a value that is below your average customer acquisition cost (prior to Coronavirus). This can be in the form of adding on for free amenities such as restaurant coupons, a luggage tracking service or an upgrade for their hotel room.
In addition, take the time now to evaluate the performance of your marketing channels. While it´s important to never only focus on 1 channel, for the immediate future, it might be worth focusing all ad spend on your #1 performing marketing channel, until things get back to normal.
Re-Shop your ALREADY booked hotels
Travel sellers generally do not re-shop hotel prices AFTER they book a hotel and by not doing so, they miss out on increased revenue – achievable with little effort. In the COVID-19 era, prices are more volatile and price reductions of over 65% are happening on a regular basis – offering many more opportunities to increase revenues and profits on reservations for July till December. Based on this study published by Phocuswire, 45% of US travelers still have travel plans for the 2nd half of 2020.
During normal times, re-shopping your hotel reservations after you book them tends to increase your net profit by 36% on average.
Pruvo's AI-Driven automatic repricing module will help you increase your profitability by leveraging the price fluctuations that occur post-booking.
Revenue share over monthly fees
Review all external services you are currently using. For those that charge a steep monthly fee, try negotiating a revenue share-based payment or finding alternatives that offer a success fee compensation.
We at Pruvo prefer to put our money where our mouth is and only charge a success fee for hotel reservations in which we managed to re-book for a cheaper price and increase your profitability. That way, we only get paid if we do our job 😊.
A crisis can be the best time to think about optimizing workflows and maximizing profits by looking beyond existing business procedures. While the coronavirus has thrown travel sellers into a difficult situation, there are ways to change the ways business is done now – streamlining processes and improving efficiency, which can be maintained after the crisis is over.