- Travel and tourism companies must find innovative ways to build their brands and attract customers, and technology and operations will play a key role.
- Unfortunately, the industry is suffering from a distinct shortage of candidates with the skills to support the full customer journey.
- Companies must develop or build teams to support strategies that cater to the new type of travel consumer.
The travel and tourism sector suffered mightily in the wake of the Great Recession. Despite the fact that strong growth for the sector has returned, the downturn-inspired habits acquired by tourists and business managers live on. To stay competitive, industry players must adapt their strategies—and their talent base—to play to the changing needs of an increasingly sophisticated customer base.
The task of finding talented people who can meet customer expectations becomes ever more difficult as the economy continues its recovery—indeed at the end of 2015, US unemployment fell to 5 percent, a low not seen since April 2008. As the demand for labor continues to grow, the shrinking number of available skilled workers causes great angst for many, particularly those in travel and tourism.
GROWTH HAS RETURNED, BUT CONSUMERS HABITS MAY BE FOREVER CHANGED
When the effects of the Great Recession hit in earnest in 2008, the travel and tourism sector quickly contracted. Total industry revenues for US hotels fell nearly 15 percent, from $156.4 billion in 2007 to $133.3 billion in 2009. By 2014, the industry had posted impressive gains, surpassing its pre-recession total revenue in 2012 and surging to $176.7 billion in 2014.
What these figures don’t convey is that the economic downturn may have permanently altered the purchasing behavior of both individual consumers and corporate buyers of travel and tourism. Many tourists who in the late 2000s became accustomed to smaller budgets, today continue to adhere to their more frugal travel habits—such as booking hotel rooms in outlying areas rather than in expensive city centers, eating on the cheap, and taking self-guided tours rather than buying tickets to events. Many corporate business managers who were forced to cut travel expenses by, say, 5 percent in 2008 simply cut 5 percent of planned trips and found more cost efficient ways to work—for example, through local staffing or the use of teleconferencing and virtual team rooms. Like individual tourists, companies have clung to the travel practices they established during the downturn.
The net result of changes to the habits of tourists and businesses: despite the fact that total travel spending is back above prerecession levels, decision makers have different priorities than they did in 2007, and the travel and tourism sector must adapt its strategy accordingly.
FINE-TUNING THE CUSTOMER JOURNEY
In an environment where travel aggregator sites such as Kayak and TripAdvisor are pushing all travel-related services closer to the brink of commoditization, travel and tourism companies must work hard to find innovative ways to build their brands and attract clients. Interactive marketing and advertising are key components of this strategy. Skilled workers in operations management and IT will be absolutely critical for success in this highly competitive industry where the hammer of price transparency has pounded margins razor thin, service failures can be blasted out to thousands in a heartbeat, and customer experience is crucial to the bottom line.
The latest Strayer@Work Skills Index, which looks at data from Q4 2015, shows a significant skills gap in many areas of travel and tourism, but particularly in operations management and information technology (IT)-related positions, where in some cases demand outstrips supply by a factor of ten. Interactive marketing and advertising are key components of this strategy. Strikingly, the recently published Strayer@Work Skills Index shows gaps in the demand and supply for these two skills, at -73 and -77 percent, respectively (Exhibit).
In fact, the eight largest skills gaps in travel and tourism were all related to technology, many having to do with operations—including the top two, CPM scheduling and enterprise software management. Like all industries, travel and tourism must find and pull the organizational or technological levers that increase efficiency and cut costs while maintaining or even enhancing their product and service levels.
Many digital marketing agencies purport to manage everything for travel and tourism businesses from strategy through execution and measuring success. But companies must have in-house employees that are at least conversant in the language of marketing technology to be able to set strategy and manage vendor relationships.
CLOSING THE GAP
Of course, there are really only two solutions to a skills gap problem: develop the talent you have or pursue experienced hires, whether as an internal or external resource. Since the most significant skills gaps in travel and tourism are in the technology arena, it seems that companies will have to look outside for vendors or qualified candidates to fill these jobs. One can’t expect to train frontline staff to implement new CPM software, but companies might be able to train an operations manager well enough to know the right questions to ask and supervise the implementation. In the competition for more cost-conscious and tech-savvy customers, the companies that can develop or assemble teams with these skills will be well positioned to succeed.
2. H. Leslie Furr, “A linear review of the Great Recession’s impact on tourism behavior,” Journal of Behavioral Studies in Business, Volume 7 – September, 2014. http://www.aabri.com/