By Vanya Lessing, ceo of Sure Travel
COVID-19 has proved to be the tipping point for an industry that was already heading into a ‘perfect storm’.
The industry has been operating on a very shaky business model, which has been a concern of mine for a long time. It’s a legacy model operating in a volatile industry. The concern about the model is its over-reliance on supplier overrides for profitability. We operate in a market that has seen very little growth for some years. Pressure on the economy, high costs, high risk, ferocious competition and extending credit to government and corporates have resulted in a lack of transparency, predatory pricing, pressure on transaction and management fees, and business just moving from one travel group to another. We were heading into a ‘perfect storm’.
The tipping point was COVID-19, with borders being closed, all travel stopping and income drying up overnight. A recent Asata survey indicates that a high percentage of travel businesses do not have the cashflow to operate beyond three to six months.
If the COVID-19 peak in South Africa is expected in August/September, borders will remain closed. Domestic travel may only restart in November or December, but international travel will stay closed until borders reopen. Airlines will look at their load-factors and reduce the number of flights or remove flights from a destination completely if a route is not viable.
Cutting costs and preserving cash
COVID-19 has seen every business drastically cutting costs and preserving cash flow. A lot of independent ITCs and owner-managed travel agents are ‘lifestyle’ businesses without big cash reserves. On the other hand, they have the advantage of being more agile in going into hibernation and starting up again quickly, with far less complexity, when travel reopens.
But COVID-19 hasn’t changed the Basic Conditions of Employment Act. Employers have to ensure that even in the midst of a crisis, they follow due process. Above all, as responsible employers we must ensure that people can put food on their table. Employers are having sleepless nights trying to balance the needs of the business and the needs of their employees. It’s a very stressful time.
However, a new era of travel will emerge. Traveller confidence will have to be restored with the assurance of hygiene and safety policies being implemented. The fear of infection is now in the psyche of everybody forever more. Corporate travel policies will have to be reviewed, as duty of care will be top of mind. It’s likely that future visa requirements will include passengers having to go through COVID-19 testing.
All of this means that business is going to take a long time to recover. After 9/11 it took eight to 10 years for travel to fully recover. This is a global crisis, which has caused tremendous uncertainty.
How Sure Travel is helping its members:
- We’re reviewing financials and advising on how to restructure and decrease costs
- We’re advising on how to access business and employee relief packages;
- We’ve deferred membership fees
- We have weekly member sessions and have brought in experts to give advice on a variety of topics, including human resources; emotional wellbeing; business modelling; future strategy
- Sharing important information
Over the past 10 years we’ve built a sustainable financial model, a model built to withstand a crisis. Most of our members are shareholders who are invested in the future of the Sure Group. We launched a Blue Ocean strategy for the group 18 months ago. Our new technology – Sure Travel Connect – has features and content that are a game changer. We are ‘business ready’.
Vanya Lessing has been in the travel industry for thirty years. She is the current ceo of the Sure Travel Group, a position she has held for the past 12 years. She has held a number of senior industry positions, including that of past ceo and president of Asata. Vanya's expertise is in implementing new strategies and business models. She is passionate about leadership, particularly the development of 21st Century Leadership for a new generation of business.
