After the fever breaks

Thoughts on rebuilding the travel industry after COVID-19

RICHARD VANDERLUBBE, TRIPCENTRAL.CA

At a time when the world has been turned upside down and each and every one of us is searching for a way to move forward, tripcentral.ca’s Richard Vanderlubbe provides some thought-provoking ideas that the industry may want to pack on its journey to recovery. In this three-part series that begins in this week’s issue of Canadian Travel Press, Vanderlubbe sets the scene, with some timely observations and advice about government travel advisories and the changes that need to be made to them.

Amidst a whirlwind of government travel advisories, supplier policy decisions, requests that Canadians stay home, the grounding of aircraft and the closing of all of tripcentral.ca’s retail locations and laying off all but a small core of its travel advisors, Richard Vanderlubbe sat down and put pen to paper or more accurately, fingers to keyboard.

In putting down his thoughts, Vanderlubbe — a former ACTA-Ontario president, as well as former TICO board member and chair and current ACTA board member – covers a wide range of issues, including:

The need to establish a permanent industry advisory board to work with the federal government on travel advisories and other industry issues.

Suggestions for changes that would involve revamping the government travel advisory website; including departure date windows on all such advisories; providing agents, operators and others in the industry with an API data feed so they have immediate access to all advisories.

Making all Canadians travelling outside the country register using a ‘one click’ process at the time they book their travel.

How to remove the financial risks for the travel trade that come with each and every government travel advisory.

Post-COVID-19, Vanderlubbe believes that “the perceived price of travel just got more expensive.”

He asks: Who takes the hit? Will it be destinations, cruising, outbound or inbound travel or all forms of travel?

Advance Purchase … Non-refundable … the old model is dead … so what’s the new model?

Transmissible diseases, cancellation, repatriation … the cost of insuring travellers in future.

Travel agency compensation – proven value, time and time again – how it needs to change to reflect the service that retailers provide to both suppliers and their customers.

Vanderlubbe says that the industry was “blindsided” by the federal government’s announcement that Canadians should either postpone or cancel their travel plans for March Break.

He writes: “[The] Friday afternoon prior to March Break was a poor time to make this announcement. It caused mayhem and put the industry and consumers in a state of uncertainty because … it was not an outright grounding or ban on international travel.”

There was chaos … agents couldn’t get through to suppliers, while suppliers were struggling to formulate their policies as quickly as possible and get their messages out to agents and their customers.

Vanderlubbe also argues that the fact that travel advisories are not dated is a big problem because they don’t tell agents or their clients when they begin and end and that, he says, needs to be changed.

He writes: “All travel advisories should contain an applicable travel date range, and it should have a mechanism and notice period to change this date range. Some advisories may have an indefinite date range – such as a state of war, sustained political unrest, sustained levels of crime and corruption, etc.”

As for the government website, Vanderlubbe recommends that the site’s landing page should sum up an advisory in seconds, use colour coding to distinguish between the seriousness of the risks in different destinations.

He also says that travel companies should be able to call a sentence or two with a deep link to the advisory through an API in real time using an IATA city code. That would allow the industry to give that first “above the fold” summary of the travel advisory including applicable dates. If the advisory changes, all websites would be instantly up to date. Further, the granularity of applying the advisory by IATA code would allow the Government to express different risks based on the area.

One of the key points that he makes is that government travel advisories come with financial risks.

“In order to restore confidence for consumers to book travel in advance, all participants in the travel supply chain – from tourist attractions, local tour companies, hotels, transfer companies, airlines, tour operators and travel agencies — must “de-risk” the advance booking and payment for travel services to consumers,” he argues.

In this respect, he points out that: “As an industry, if we continue to push this risk onto our customers, it will stifle any attempts to market or price our way out of this problem. This risk cannot be left to private insurance coverage or optional cancellation waivers.”

Going forward he believes that the industry “must embed the concept of refundability due to a government advisory from the customer’s home country, or destination country (or countries on a multiple stop trip). This risk must be priced into the travel service itself, and not left as an optional upsell.”

And he believes that “all contracts between suppliers and tour operators must contain clauses in the event of government advisories on either end of the transaction to result in a ‘frustration’ of the contract where neither party is obligated to perform without financial penalty.”

In the event of government travel advisories to avoid all non-essential travel or avoid all travel, the consumer should get their money back because they paid for a travel service that will not be performed.

“The problem we have today,” Vanderlubbe observes, “is that this risk was not priced in, and many supplier contracts do not have these provisions, so it is impossible today. Advance funds have been passed, and airlines and cruise lines use advance customer monies to finance current operations. This may require re-capitalization in the long term and will not happen overnight. But we can transition such that new transactions are priced with this risk and hold this provision.”

However, says tripcentral.ca’s boss, if a consumer books advance travel when an advisory exists, they should not be entitled to a refund unless the advisory escalates. That’s why a government advisory should exist by IATA code and not by country.

For example, he says, there could be a Level 3 warning for some areas of Mexico and not others, but if Cancun changes, demand and supply still exists, and the consumer knowingly purchases while the advisory is in effect, no refund should apply.

“It is essential that the risk of changes in travel advisories are priced into the base price of the service,” states Vanderlubbe.

Next week: Vanderlubbe offers some thoughts on the impact of COVID-19 on consumers and whether the industry can “price its way back” to pre-pandemic demand levels.