With the beginning of the summer holidays and due to some travel relaxation, the business of German group tour operators was able to resume its activities. The company’s own reserves, cost savings (e.g. reductions in the marketing budget), as well as subsidies/financial support granted by the state (including short-time allowance, interim aid) have helped over the past months to secure short-term liquidity. According to experts, restructuring measures are considered a last resort and emergency solution.
The basis for a successful vitalization is the sustainability of the product Group Travel, which is characterized by the strong desire for acquaintances and shared experiences of travellers. Furthermore, organized group tours, unlike individual tours, convey an increased feeling of security.
One consequence of the coronavirus pandemic will be a market shakeout within the entire tourism industry. Currently, group business is being held back by safety and hygiene regulations. Hence, the reorientation of this product is highly crucial. Part of this reorientation will be a shift towards small groups (4-8 participants), initially travelling within Germany and Europe. In addition, future planning processes with service partners are going to be created more flexible and agile through “special” contractual terms and conditions (e.g. relaxed cancellation conditions, rebooking options).
Experts see the biggest opportunities in digital processes. This is because digitalization is going to have a lasting effect on all areas within a company, including the design of the product portfolio, finance/controlling, management as well as the organizational structure. The expansion of digital communication with customers, as an example, are going to lead to cost savings with focus on a healthy combination of online and print solutions in addition to customer advisory services.
Further opportunities arise from both flexible and inflexible planning options. Group tour operators expect flexibility particularly in purchasing (e.g. flexibility in cooperation and contract design) and portfolio design (e.g. flexibility in guaranteeing services). Whereas long-term price calculation and the required planning security of service providers and customers are perceived as reasons for inflexible planning processes.
As a result of the pandemic, the travel behaviour is going to change and consequently will develop new potential for the portfolio design. On the one hand, travellers have a greater need for safety, which is why they will book at shorter notice. However, a stronger focus should be put also on trends not related to the coronavirus, such as individualization, sustainability, and the increasing nature-loving way of life, when planning the program.
The experts’ learning experiences are mainly related to human resources, most importantly employee management.
This is why the greatest progress can be made through regular and transparent communication with employees. That way a stronger team spirit and a pleasant working atmosphere can be created – despite short-time work or having to work from home. Furthermore, it turned out that especially medium-sized companies benefit from their mostly flat hierarchies in terms of a faster adaptability and decision making. Nevertheless, almost all group tour operators regardless of their size feel affected by political measures (e.g. travel warnings, hygiene regulations). Their biggest fear is that the effects could jeopardize their existence because of the complex cross-sectional nature of the tourism sector.
The insights gained represent no more than a snapshot owed to the rapid developments of the coronavirus crisis. New developments have a direct impact on the experts’ assessments and affect not only business activities but the entire company. The results clearly indicate that the coronavirus pandemic has caused an existential crisis for the tour operator industry with its predominantly small and medium-sized companies. Consequently, immediate action is required. Especially now it is absolutely crucial to react to the crisis with determination and by tackling the changing process. In Part II, a model consisting of action alternatives is presented, which can be used in the sense of a restart for strategy development over the medium term.
The results are derived from expert interviews conducted in the course of the master thesis “Analysis and evaluation of past and current crises in the German tourism industry for the development of action alternatives for tourism players in the wake of the corona pandemic” by Ms Ellen Bauer (master student of the program “Entrepreneurship and Leadership” at the FH Kempten) in cooperation with Dr. Fried & Partner.
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