Emerging Online Travel Firms
Berightback and Finalprice use only digital social media marketing channels. In order to combat the economic situation brought on by the Covid-19 pandemic, travel startups should be focusing on marketing, business model pivoting, fundraising, and mental health. Details of each company and Covid-19 changes to businesses have been provided below.
- Marketing Strategy: Berightback does not have any large-scale marketing campaigns currently running, however, they focus most of their marketing efforts on social media channels using Twitter, Facebook, and Youtube influencers. In addition, the company uses messaging such as "Do more of the things you love with the people you love" to attract customers. In order to retain customers, the company has several offers to entice customer returns such as 3 trips a year, a money-back guarantee, and a surprise travel feature.
- Marketing Channels:
- After an exhaustive search, we found that Wanderift is no longer in business as their website is inactive, their Instagram page is inactive, and the last post on their Twitter page was in 2019.
- Marketing Strategy: Finalprice does not run any large-scale marketing campaigns, however, they focus their marketing efforts on social media channels using Facebook, LinkedIn, and blog mentions. The company does not have any advertisements through affiliates, print or TV media, or partnerships. The company uses messaging such as "Save money & time with fair prices" to entice customer engagement. In order to retain customers, the company offers a rewards program, discounts, and payment security.
In order to determine the average annual marketing spend for each of the above companies, we began our search by scouring company reports, press releases, and media releases in search of the actual marketing spend in recent years. Unfortunately, we were unable to find the precompiled data for BrB or Finalprice through this source. We then searched public reports and company databases such as Crunchbase, Zoominfo, Pitchbook, and more in search of an estimated or actual figure. This search also provided no results. We then attempted to calculate an estimated marketing spend by using the recommended percentage of revenue by industry for marketing spend to calculate the percentage of the company's actual revenue. Unfortunately, BrB is a private company and does not provide financial details to the public. In addition, there were no estimated figures in any of the previously mentioned databases or reports. Due to these findings, we were unable to calculate the estimated or actual marketing spend for BrB or Finalprice.
Travel Startups COVID Strategies
SnapTravel Case Study
- Prior to Covid-19 the travel startup SnapTravel was seeing annual growth of 300%, however, when Covid-19 hit, the company saw an 80% drop in sales overnight.
- Following the global travel restrictions, the company stated, “Planning is useless in times of uncertainty. The only thing you can do is figure out the next 90 days in 30-day cycles, and manage cash weekly.”
- The company previously had a business model to focus on "aggressive growth, racking up losses in pursuit of gaining users and growing its footprint worldwide," however, due to Covid-19, the company completely reworked their business model into a 10-step playbook for profitability.
- The ten steps are as follows:
- Put out the fires and remove distractions.
- Set a clear direction for the company
- Tackle the hardest part. Payroll.
- Ensure alignment within the company
- Identify and re-negotiate all costs
- Tighten up paid marketing
- Adapt the product to the new world
- Innovate to drive new revenue streams
- Re-engaging with our existing customers
- Maintaining a strong cash position
- Not only did the re-working of the company's business model and product offerings jump-start sales growth again, but it made the company profitable where they weren't prior to the pandemic.
Shift in Trends
- As the world works on economic recovery, regions like the United States and China rely on travel industries as a driver in economic growth. This creates an opportunity for travel startups to alter their offerings or expand them to large corporations that will need to adapt their business models to remain profitable.
- The venture teams at a travel startup called Plug and Play stated, "Innovation must continue, but the underlying strategies should be adjusted, which Plug and Play can help in redefining. Large corporations must resist the temptation of cutting the entire innovation budget but choose to invest their resources much more strategically. Partners in our ecosystem should put less focus on frontier tech that is at least 3-5 years out. On the other hand, in terms of technologies that impact their core business, our partners should prioritize safety and confidence over other aspects of a seamless journey. We also hope that the ongoing crisis will serve as a wakeup call for the travel industry to work together on open data initiatives during the aftermath. After all, in order for travelers to learn and avoid potential risks of being in close contact with someone infected, airlines, airports and hotels must break all the data silos and work together with more companies."
- The company also stated, “Unfortunately, many startups will not survive the impact of the novel coronavirus. We're already seeing tons of layoffs and startups having to switch their full-time employees to part-time. Startups that already had a short runway before the crisis will be hit at an accelerated rate. At the same time, we've seen an impressive number of startups quickly pivot or develop additional solutions for COVID-19 applications in the areas of prevention, detection, disruption management, and operational efficiency, which has showcased the agility of these founders.”
- Startups that the company runs that could help the industry recover include the following:
How To Alter Business Models
- According to industry experts, there are a few key areas to watch as the industry changes, marketing, business model pivots, fundraising, and mental health.
- Marketing in uncertain times is a challenge that many companies are trying to overcome. The travel community seems to have a focus on temporary marketing efforts geared towards other businesses that need help during Covid, providing higher content in marketing, haulting paid advertisements, and focusing on nostalgia.
- Business models should pivot to focus on three main areas: managing losses, gaining ground, and managing psychology.
- Fundraising should focus on maintaining relationships with investors and altering budgets.
- Employers should focus on the mental health of all their employees including themselves. Employees are in a fragile state as people manage business, financial, and personal losses due to the pandemic. Mental health should be a focus of a business moving forward to maintain productivity and efficiency.
Opinions On The Future Of Travel From Industry Insiders
- “People are realizing how important travel is in their life. I think things will get better than normal in 12-18 months.”
- “Safety will be a big focus for everyone. Business travel will be slowest to recover, followed by luxury/leisure, and domestic US trips and economy travel will rebound the fastest given everyone is caged up right now and money is tight but they want to travel.”
- “Most likely, the number of cases will continue to peak and dip over the next couple of years (barring a vaccine). I think travel advisories and restrictions will be constantly evolving to respond to that.”
- “I think this has shown that many jobs and meetings can be done remotely so business travel might be slower to recover but I suspect tourism will recover more quickly as long as unemployment can bounce back.”
- “In the tour space, I think we'll see a trend around self guided touring vs. groups. Also, the distribution pendulum will swing back to OTAs and away from direct bookings”
- “A very positive outcome is the idea of the collective coming back to light — consumer companies branding from a place of connecting people, building community, help a neighbor etc — are entering a very ripe market”
- “I believe that after this is over people will crave social, emotional and physical connection. They will want to spend more time with family, friends, their loved ones. They will also have more digital literacy and comfort. So anything that supports these behaviors will be the key.”
- “Would love to see more consumer friendly policies from companies being bailed out. And maybe more flexible booking policies in general.”
- “My team is working with one of the travel booking platform now, and they see current times as an opportunity to work on improvements so they can be ready for the times when Travel will resume. In short stay positive and plan for the longer run!”
- “I see more people are focused on "educating" their clients more about their products. Which concludes to building Brand awareness.”
- “I think health and safety are going to be integrated into every step of the process. Whether its temperature scanners during the security process or questions about health exposure risks at customs or even airline specific policies shown at booking- we are going to see it at every step along the way”
- “I think even how people experience day of travel will be different. Industry will take 2-3 years for full economic recovery. I think some of the change agents will show up strong — flying taxis for extending the window of short haul flights etc.”