2020 was full of unforeseen challenges and events. But it also brought with it something which we did not have prior to the pandemic – fresh and relevant data.
Collected and assessed, these statistics may serve as essential building blocks in formulating a strategic approach to the months that lie ahead.
Much of the industry has invested hope in the highly-anticipated, post-quarantine revenge travel. And there are recorded facts that may actually support this (as discussed in the following pointers). This would indicate that there will be a readily available market once borders are fully lifted. Given this, the travel industry is led to focus on two general objectives – to be prepared to re-generate business once international tourism resumes. And secondly – to sustain itself until international tourism resumes.
The list below aims to provide a data-supported guideline on how we, as a community, can dredge across this deluge and pave the way to recovery – stronger, wiser, and thriving.
Devising Localised Marketing Plans
The second half of 2020 shed an entirely new light on the importance of domestic tourism. Since April last year, 100% of the world’s countries are implementing some form of COVID-19-related travel regulation, according to the United Nations World Tourism Organization. And it has remained the same in Asia and the Pacific up to the present.
With international tourism not expected to re-flow at least until the 4th quarter of 2021, tapping into the domestic market is the most critical goal for the vacation rental community at present. To some, doing this will require venturing unexplored marketing strategies such as creation of materials in the local language, partnering with local agencies, anticipating country-specific holidays, shortening minimum length of stay to accommodate weekenders, providing payment options in the local currency, and exploring B2C channels and communication media that are more common to the region.
Of course, local bookings can only cover a fraction of the pre-pandemic income, but there certainly is an existing market. In fact, Asia and the Pacific region possess the largest aggregate domestic travel market. Japan, for instance, ranks 3rd globally in terms of domestic tourism market expenditure according to UNWTO.
Another uplifting sign is that more and more locals are intently booking trips and accommodations as self-initiative support for their country’s economy. This has been observed particularly among the local elites.
If nationwide containment of the virus would succeed, there is a good chance that the local market can sustain some businesses.
Maintaining Flexible Cancellation Policies
Following the enforcement of travel restrictions, data show that booking considerations develop a particular focus towards cancellation policies. This is particularly observed among the upper class market, with some even regarding this as their primary consideration over more obvious factors such pricing and discounts.
Interestingly, a much larger percentage of clients, some 60%, expressed concerns about cancellation policies compared to other Covid-related factors. Hygiene protocols, for example, was asked by only 7% of all overseas inquiries.
In a world ravaged by uncertainties, people look for certainty. Conversion of a sale in the new normal will depend greatly on having a cancellation policy that is conceivably favorable and transparent to international clients.
Securing Long Term Rentals
The Covid phenomenon has also spurred an increase in long term rental inquiries. In some regions, the differential ratio between short term to long term rental inquiries showed an astonishing increase, jumping 25 times the usual percentage right after the implementation of quarantine measures. This does not include existing guests who decided to extend their stay at their villa accommodation.
Like many others, countries such as Japan, Thailand, and Indonesia granted special terms for foreign visitors to extend their visas. This allowed financially capable tourists to stay for several months, with many preferring to isolate themselves in holiday destinations rather than in their home countries.
Securing long term rentals will certainly be a win-win situation for villa business owners. However, with such a tight competition, it will mean having to drop the prices substantially. The duration of such bookings must be wisely managed too as binding a property to a long-term rental could mean missing the opportunity to get bookings at more profitable prices once the travel situation stabilizes.
Ensuring Customer Retention
A notable trend, as reflected in The Luxury Signature’s data, is that international travellers are now planning vacations in a more staggered manner. Due to uncertainties in travel conditions and government regulations, the time frame from inquiry stage to the booking stage tends to be longer than usual. Even with the provision of acceptable cancellation policies, booking terms, and rental rates, more than 93% of all potential clients choose to hold off a reservation regardless of how far ahead the booking is. And instead prefer to make a decision closer to their booking dates.
The good news, however, is that there is an existing market pool of clients with expressed intent to book an accommodation once conditions permit it.
In a series of surveys conducted by the International Air Transport Association (IATA), numbers show an increasing rate of people with the intent to travel as soon as conditions allow it, rather than wait it out for months. Most importantly, of those surveyed, 56% cited ‘to vacation’ as their reason for travelling.
Therefore, an early and sustained communication with these potential clients will be key to a successful start once the market reflows.
Anticipation of Border Reopening
Who isn’t? Yes. Obviously, this is what the entire tourism sector has been doing since the beginning of Covid. However, it is important to point out that preparing for the return of international tourism is a matter of constant adaptation in the present. This means every decision we make now – any change in policy, rates, or procedures must be weighed with consideration to their long term effects.
This is not an easy thing to do. Projecting the return of cross-country tourists, even setting an estimate, is as critical as is it impossible. Some airline companies have placed bets on 1st July 2021, reopening their ticket sales for international flights beginning the said date. With so many variables involved, this hopeful prediction may just be as good as anyone else’s.
Monitoring External Factors
Of course, the majority of points mentioned above are aspects to consider in relation to actual business operations. But the bigger part of the equation are the factors beyond our control – when will the vaccinations make it safe enough for people to travel? Will tourist-source countries still have the purchasing power after the economic damages? Will the world be able to contain the new variant? Will tourism operations return as travel bubbles? For all these and many other things, the only action we can take is to wait and to closely monitor.
However, though we are forced to play the greater part of the game by ear, we do have some facts that we can objectively rely on.
For one thing, we do know that the strongest factor holding back people from deciding to travel overseas is the subjection to quarantine. According to IATA’s survey, surprisingly, more travellers expressed concerns about being quarantined in their trip than actually being infected by the virus (85% versus 84%). This report is also consistent with our own data which concludes mandatory quarantine as the leading external factor in the turn down of potential bookings.
Therefore, if ever there is a singular indicative sign heralding the reflow of the international tourism market, it will most probably be the lifting of quarantine measures.
And when they do, then it is our role to make sure that travellers will have the same private accommodations where they can once again rejuvenate and refresh themselves; recreational venues where families, long separated by closed borders, can reunite and celebrate; holiday homes where people can create precious new memories and remind themselves of the important things in life, the reasons that have kept them standing strong throughout the pandemic.