Managing through the initial crisis
Perhaps unsurprisingly our research showed most companies are more concerned with the length of the lockdown than any other factors. Cash flow requirements and a possible consumer and economic downturn were also prominent in joint second.
Having furloughed staff, executives are now focussing on the next immediate crunch point. All surveyed have taken this action, 69% of respondents are operating with less than 50% staff currently and many with less than 25%. Key cash periods are expected to be quarters three and four of 2020, as is typical for travel operations, with added pressure this year given uncertainty over when revenues will return and at what level.
However, the majority of businesses expected to be able to meet their requirements through a combination of existing capital sources (both debt and equity), supplemented by government funding schemes.
Preparing for the future
Our survey highlighted a focus on establishing new systems and processes for re-opening, given the likely ongoing requirements for additional hygiene and social distancing measures.
Beyond that, many travel businesses are using the current period to restructure their businesses or invest in future requirements, to the extent cash flow allows.
Examples include restructuring teams, with many of respondents taking the opportunity to think about the optimal team size and structure beyond the crisis period. Those operators with physical assets are thinking about rationalising or refurbishing assets.
Others are taking the opportunity to progress with technology projects such as digital enhancements and website upgrades.
While there are divergent views, given the current level of uncertainty, most operators expect to reach a meaningful level of holidays within 3-9 months following the end of lockdown.
However, returning to a pre-crisis level of holidays is expected to take anywhere from six to over 18 months.
Much of that variability reflects on the type of travel business. Domestic travel is expected to return faster than international travel given potential travel restrictions; there is also a tendency for consumers to trade down to more domestic holidays during economic downturns, as we saw during the 2008 financial crisis.
This may well be affected by the duration of lockdown, its easing and how this ties into the seasonality of the booking cycle.