“People who say they don’t see an acceleration of innovation is willful blindness. We are innovating at a wonderful speed for the basic things we think everyone should get.”- Bill Gates.
With ever-changing technology, industries across economies tend to adapt to survive. From a micro viewpoint, some companies fail to adopt and adapt to external environment changes, especially technology. The top Indian travel companies working with an international presence are Cox and Kings, Dook Holidays, Oceana Travels Pvt Ltd, Travel mint and more. Thomas Cook would have topped the list if it had existed to this day. Thomas Cook had been awarded the ‘Favorite Specialist Tour Operators award’ at Conde Nast Traveler Readers Travel awards for two consecutive years. But, the German company has filed for bankruptcy. What went wrong in this industry?
The tourism industry has reached $1.6 trillion. According to the World Travel & Tourism Council, in 2017 10.4% of global GDP was contributed by the tourism industry. The labour market engaged in this industry comprises of 10% as per 2018 reports. The industry keeps reaping benefits to the world economies. Travel has become more accessible to people with cheap airfare due to price wars between airline companies. To make travel easy for all we are blessed with ‘middlemen’ called tour operators. They efficiently mediate between travellers and travel destinations. From transport tickets to hotel rooms, everything has been made a click away. travellers are not only keen on availing services of tour operators but also choose to be customers of agents expert in sustainable, environment-friendly travel. According to Statista, in 2017 54% of people were willing to adopt sustainable travel. Thomas Cook couldn’t stand the competition, financial crisis, and turned to insolvency. A 25-year-old company, Jet Airways, suffered the same fate and collapsed. About 600,000 travellers were stranded and many employees shifted to unemployment in the case of Thomas Cook. These aren’t the only two companies, this list also adds Iceland’s WOW Air which encountered the same fate. Air India also looks forward to disinvestment. Low-cost airline Monarch also fell to its knees. One thing remains similar in all the above collapses, namely, financial troubles. Many travellers remained unaware, worried, and disappointed as they vested their trust upon the big names of the travel industry. In these tough situations, comprehensive travel insurance comes handy for travellers. There is a reimbursement if the flight is cancelled or any unforeseen contingencies arise. But, why can’t we travel without risk? Travelling is supposed to be for relaxation and exploration.
Social media influences heavily on making decisions. As per Expedia reports in 2018, 50% of travellers hailing from the United States of America, Canada, Australia, and the United Kingdom said that they chose to travel to a destination post-viewing content about promotions on social media. The social media and online travel aggregators such as Goibibo, Booking.com, MakeMyTrip, and others weigh heavily on the competition for tour operator companies micro, small, medium, and large enterprises. For instance, Thomas Cook failed to attract investors as it seemed that it is operating in a saturated market where there are numerous substitutes for its service in terms of being a travel agent. Taking advantage of Thomas Cook’s failure other airline companies hiked their prices. A traveller reportedly noticed Jet2.com hiking its price by 800 pounds in a span of 4 hours.
What can the existing travel companies learn from Thomas Cook’s story?
Former managing director, Tim Jeans, of the collapsed low-cost airline Monarch, said that Thomas Cook followed “an analogue business model in a digital world.” It becomes primary to have reliable sources of finance if expansion is a strategy. If taking a risk doesn’t hinder decisions even though the investors are not trustworthy, then confidence in your product or service becomes mandatory. Quoting Benjamin Franklin, the man who tried till he succeeded, “Beware of little expenses. A small leak will sink a great ship.” Spending within your means and needs remains a priority when finance is murky. Moreover, adapting to the micro and macro environment of the business is essential for survival. A business should change with the changes in the environment. Competition, technology, and innovation took a back seat for Thomas Cook’s journey. What travel agents fail to see today is that the customer is a king and prefers personalization. A customer wants to put together their trip and doesn’t wish a “middleman” to do it for them. Therefore, the shift to travel booking websites which allows you to book whatever and whenever you like. The collapsed airline company, Monarch’s former managing director Mr.Jeans specified that customers opted for online bookings for their travel and did it their way. Therefore, Thomas Cook plummeted.
One-third of small businesses commence its operation with investments up to $5000 or Rs.3,53,000 approximately. Among these, 58% of businesses required only Rs.17,66,000. With such investment capabilities, businesses and competition grow every day. Indian Finance Minister, Nirmala Sitharaman has assigned a budget of Rs. 1,378.53 crores for tourism infrastructure. Promotional expenditures are accounted for Rs. 575.50 crores. India’s top online travel booking sites are MakeMyTrip, Yatra, ClearTrip, EaseMyTrip, Goibibo, Expedia, Cox and Kings, and more.
The fates of these travel companies highly depend on finances, competition, and even meteorological conditions. Once a company’s financial crisis it’s the headlines, the stocks quickly fall and so was the case of Thomas Cook. The tangible assets of airline companies require high investments. Hence, the loans which lead to bankruptcy. But, a business should always know when to turnaround or retrench. As compared to leaving hundreds of customers perturbed.
The impact of COVID-19 on tourism industry:
- A breakthrough growth may be experienced due to being in lockdown for a long period of time. Many people wish to travel due to emotional and psychological rest.
- There are other sets of people who prefer to stay home due to health issues, especially children, the old, and immunity compromised people.
Companies in the tourism sector are already ready for marketing campaigns. Goibibo targets the families and MakeMyTrip targets couples. The companies in the tourism sector are prepping for travel to open and the industry to kickstart again.
The locations which are COVID-19 free will be the first to open for short period travel. The tourism industries which mainly run on international tourists will also find a considerable amount of difficulties in terms of footfall.
The marketing which will be taken up pertaining to a destination will also make an improvement with many campaigns showing the rejuvenation and relaxation required post being anchored at homes.
Impact to be felt on both white and blue-collar jobs and up to 50 million jobs are at risk globally, representing a reduction in jobs of 12 to 14per
cent, the government should accept the proposal from TAAI and should also consider a complete GST Tax-free Holiday for the Tourism, Travel & Hospitality Industry for the next twelve months
In this new scenario in which the world in general and tourism, in particular, have not been free from the emotional impact caused by the coronavirus pandemic, the indicators indicate
that after this situation, the identification of tourists, the procedures to facilitate travel and border crossing, the safety of passengers, their health and the prevention of countries from possible threats
coming from abroad, need innovative, safe and sufficiently useful tools with a massive reach.
In this case, the purchases and expenditure made by tourists bring benefits to local social and economic development through the acquisition by tourists of Products with a Cultural Identity, facilitating the creation of new tourist offerings, in turn, enhancing economic and social financing and investment projects, as well as creating stronger links for the international promotion of the cultural values of the respective territories, there is a need for promoting cultural and economic integration between diverse regions and the regional territories through communication. It is also necessary to create promotion and marketing of domestic craft, artisans, creatives, and cultures globally and the interconnected world within the concept of the Orange Economy.