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Questions & Answers with Joel Ostrov
In this week’s issue of Canadian Travel Press, Direct Travel’s president – Canada East Region, Joel Ostrov talks about the impact of COVID-19 on the Canadian travel business and how Direct Travel is managing its way through the pandemic. Ostrov answers are thoughtful, straightforward and, something everyone needs these days, optimistic about the future of the industry.
Canadian Travel Press (CTP): Maybe you could give me an overview of how Direct Travel has been weathering the COVID-19 storm? How has it impacted the company’s business?
Ostrov: The reality is that business is down about 95% year over year since early March. Ironically, January & February were record months for Direct Travel, both here in Canada and in the USA as well. The months of March and April were spent cancelling millions of dollars-worth of air tickets and travel packages.
CTP: Three months in, can you paint me a picture of the day-to-day activities at Direct Travel? Is staff still working? If they are, what are they working on these days? Has Direct Travel taken advantage of any of the federal/provincial/municipal government programs to help businesses and their employees?
Ostrov: Obviously, with the significantly reduced volume, we have made adjustments in staffing, however, the key as we evaluate our staffing levels is that we don’t impact our customers and our travellers – the true value of a Travel Management Company (TMC) is in tracking and future utilization of the unused tickets, working with the carriers to ensure name changes (due to lay-offs by customers), and maximization of all the waivers the carriers throughout the world have provided. So, we have had to balance rationalizing our costs with ensuring that our customers are able to maximize the benefits the carriers have provided to customers.
Fortunately, in Canada, there are numerous government programs that we have been able to take advantage of. The staff working on reduced hours are part of the Government Work Share program, whereby an employee can stay on, say 3 days per week, and the government will cover the other 2 days. I would say over 50% of the team in Canada is part of this program.
We are also taking advantage of the Canada Emergency Wage Subsidy program whereby the government is paying DT back for 75% of the salaries of those persons still working, either full time or on the work share program. This program covers up to $ 847.00 per week per employee that we keep on the payroll. We received our first government payback [last week], and I can tell you that this is a big help in keeping people employed as well as getting our bills paid.
I believe that compared to other countries, the Canadian government has done one of the best jobs to minimize the impact of COVID-19 on employees.
The team still in place consists of many members of our amazingly skilled employees, doing everything possible to keep the company going. We are assisting all departments to ensure that those corporate clients that are looking to us for answers have knowledgeable people to talk to and guide through the maze of supplier rules and regulations regarding cancelled flights and/or vacation packages. This task in itself is monumental, especially given that major suppliers seem to change their rules every few days.
In addition, we have kept enough travel advisors on staff to take any new reservations, change old ones, and cancel those that passengers were hoping to use, but whose flights are only now being cancelled as the crisis continues and shutdowns of countries are still the norm.
CTP: What should travel companies be doing now? Should they be selling travel? Should they be planning for the future when they are able to do business again? What do travel companies need to be doing to assure their future?
Ostrov: First and foremost, professional Travel Management Companies (TMCs) should be reassuring their team members that things will improve, and that the travel industry will bounce back sometime in the future.
As you well know, the industry has endured many crises in the past 40 plus years that I have been in the business. From commission caps, to commission cuts, to 9/11, to the great recession of 2008/2009 to SARS … and now COVID-19.
People will travel again, and we should be selling travel with confidence and not get caught up in the “worst case” scenarios that are floating around social and mainstream media.
In terms of assuring our future role as a viable part of the travel management landscape, it is the time to take a hard look at your pre-COVID-19 operations, look for ways to do business better and smarter, and provide your customers with the tools necessary for them to send their travellers out into the world again knowing they will be safe.
Duty of Care programs will become an even more important aspect of every company’s travel program. You need to know not only what locations your travellers have visited – both business but more importantly, personal/vacation, but specific hotels to ensure they have not been exposed to the “next COVID-19 of the future.”
Lastly, TMCs will need to price their services in a way that rewards them for the overall management of a client’s travel program, and not just for booking a flight and issuing a ticket, but all the work involved in cancelling tickets, managing the unused tickets, and utilization of the daily changing waivers.
The role of the Account Manager will become even more important post-COVID-19, and I believe corporations have come to value that aspect of the partnership with their TMC more than ever before.
CTP: Reopening the economy is the focus of a lot of the discussions going on right now – for obvious reasons. To begin with, how do you see the economy reopening? And, as a follow up, where do you see retail travel fitting into the reopening plan in Quebec … and across Canada?
Ostrov: Personally, we have all learned a ton of new rules – washing hands more frequently, masks to ensure sneezing/coughing does not contaminate, social distancing two metres, etc. – with these new normal rules, I truly believe we are going to see more Quebecers changing habits.
However, Montreal, where I am located is the “New York” of Canada because of the “joie de vivre” attitude of Quebecers to always live life to the fullest.
We even have a slogan here in Quebec to deal with this, “c’est va bien aller,” which means, everything will be all right.
Social distancing in a society where the two-cheek kiss is the norm is not an easy thing for people to accept, but I think we Quebecers are finally getting the message and you see more and more people wearing masks in the grocery stores and pharmacies.
Our head office here in a Montreal suburb, was able to remain open as an essential service due to our servicing the Canadian Red Cross and other government bodies, so reopening is not an issue for us in Quebec.
That being said, the rest of Canada, from Toronto to Victoria will see a more gradual and staged opening over the next 2 to 6 weeks. We are actually getting new domestic bookings every day and have been told by numerous corporate clients that they will start travelling to the USA for business as soon as the governments officially open the borders.
CTP: Direct Travel does a lot of different things … maybe you could talk about how you see the TMC market (business travel, conference, incentives, etc.) reopening. With the common wisdom being that social distancing is the major weapon to fight the spread of COVID-19 – can this market place actually get back to doing business in that kind of environment? And if, yes, will the way that it does business be different? And how will it be different?
Ostrov: This is the crystal ball question, right. I believe it will be a matter of when do people feel safe to travel?
Trust me, some are so anxious to travel, we are getting a lot of leisure bookings today both near term and into 2021.
Despite some of the news media coverage of COVID-19 on cruise ships, 2021 sailings are almost sold out.
Our travellers are so confident in suppliers to implement the proper safety processes – the carriers have never been cleaner, the hotels have never been cleaner, the cruise lines have never been cleaner.
In Canada, the Air Canada Care+ program announced last week has gone a long way to ensure passenger safety with the entire process of getting from here to there. From the airport check in, to the boarding process, to the onboard experience, they have developed a comprehensive program that I think will be replicated by many of the world’s airlines in the weeks ahead.
Feeling safe is what the public needs, because people need to travel. Yes, Zoom and GoToMeetings serve a vital purpose, but nothing beats a face-to-face meeting with your colleagues, your customers or your suppliers.
No disrespect to any vendor, but we have had technical challenges in several of our virtual meetings – and truly reading the reaction/attitude/compatibility is only possible in face to face meetings.
Take that element away from society and I think you end up with a very cold world and one that collides head on with the human spirit.
Call me the eternal optimist, but after starting my career in travel back in 1977 until today, it is a People Business, and will once again be one when we successfully get this virus behind us. This is so important for business travel, conferences, incentives and all other aspects of industry.
CTP: What about the leisure market – how do you see that recovering? And how do you see it being different?
Ostrov: We are seeing leisure travel picking up very quickly – we have done over $30 million in the past two weeks as a company – however, it is for fourth quarter and 2021. But we are seeing very large bookings – high end bookings and lower end bookings – people have pent up anxiety to get out and around.
I think the leisure market will have a great first quarter 2021 season. We are even getting cruise bookings where certain categories are already sold out for January and February.
Travel has become, for many in our society, as necessary as going out to a restaurant, playing sports, watching TV or doing any other leisure activity. It has become the one thing that many look forward to for months before a trip.
If you were to survey social media postings like Facebook and Instagram, I bet a huge majority are travel related, with people posting their pictures taken on trips with as much excitement as when they were actually experiencing the places visited.
All-inclusive packages that offer only buffet meals might be a thing of the past, but these properties will adjust and offer table seating in order to survive.
I have no doubt in my mind that by mid 2021 leisure travel will be back to pre-COVID-19 levels.
CTP: If governments continue to keep social distancing and self-isolations rules in place as they reopen the economy, how would such rules impact on your business and the travel business in general?
Ostrov: I believe in time social distancing rules will be eased, and self-isolation will no longer be required.
For the time being, however, people will adjust to travel with masks and keeping a 2 metre distance between themselves and fellow travellers if necessary, just as they have done already when they go to the Supermarket or Pharmacy.
Human beings are very adaptable creatures, and if the choice is to go away and fly with a mask, or stay home, I think people will don their masks as required and keep their 2 metre distance as necessary.
CTP: Refunds versus Vouchers are a hot-button topic … can you talk about what would happen if airlines and other suppliers were required to provide consumers with refunds rather than future travel vouchers? Can you spell out how damaging this would be?
Ostrov: This is really a question for our customers – both corporate and leisure.
For the travel management companies like Direct Travel, whether our customers get a refund or get a credit for future travel is of little difference to us. It is more about the personal preference and needs of each traveller – do they expect to travel in the near future, do they have a cash crunch, do they have an ability to manage with name change and other waivers the unused tickets and do you want to help the supplier that might have a slight bit of a cash crunch.
I do worry about the damage to the various industry suppliers (leisure and corporate), as it would significantly drain their cash positions and perhaps force many into bankruptcy.
CTP: If you believe that the industry will recover, when do you see that happening … 2020 … 2021 … 2022 …? And as a follow-up, do you see a smaller industry? Higher prices for travel? Different kinds of products?
Ostrov: The Executive Team at Direct Travel has done an analysis of the recovery prospects, and there is a widely-held view among us that we should see business travel back to 50% of pre-COVID-19 levels by the end of 2020, back to 75% by mid 2021, and fully recovered by the time the ball falls in Times Square ringing on New Year’s Eve 2022.
We are very optimistic that China is already at 75% capacity and 50% load factors after two months of restrictions being lifted.
Korean Air, Asiana Air, Emirates are implementing several international flights and we are seeing Mexicana and other carriers also putting timelines for reinstating international flights.
Obviously to continue to be profitable with 50% or less business, our company and the entire industry will be smaller, but will grow again as business grows. Unfortunately, we do expect some travel agencies will not survive this crisis – which is sad as we have great respect for all our competitors – but I think if you view every crisis in history, there are companies that do not survive.
In terms of different products, this industry is a dynamic one, and always has been. When I took my first New Year’s cruise back in 1977, the ship was a little over 10,000 tons, the size of a life boat on today’s Mega Ships like the Anthem of the Seas. Could I have predicted a ship carrying 6,000 passengers plus crew back then, NO … but that’s where the industry went.
I think what you may see are smaller ships entering the cruise space, like the Ritz Carlton yachts, but maybe ones geared to the price conscious traveller.
CTP: Last question. Are you optimistic or pessimistic about the future of travel? Why?
Ostrov: I kind of answered this already. I am an eternal optimist. I think it goes hand in hand in being in this crazy industry for so long. Bob, you know full well after covering this travel business for so many years, that people who are in it LOVE it, and cannot see themselves doing anything else.
So yes, I am optimistic. I know the human spirit is one where once travel gets in your blood, it is there for a lifetime.
I am extremely confident that travel volumes will be at 2019 levels by end of 2021 (if not sooner) – we are a country of people that love to explore – love to have new adventures – love to see sights they have never seen. I have yet to meet one person that is happy staying in their home – Quebecers love diversity – love exploration – love vacation.