Travel companies need to provide flexibility or risk getting left behind

Credit: Denis Belitsky / Shutterstock.

Companies operating in a range of sub-segments within the global tourism sector have been dramatically changing long-standing policies around cancellation and change fees. This is to provide travelers with the new must-have when booking a trip in the ‘new normal’ – flexibility.

According to GlobalData’s most recent COVID-19 recovery survey, 53% of global consumers are either ‘quite’ or ‘extremely’ concerned about restrictions on local and domestic travel and 49% echo this sentiment for restrictions on international travel. This substantial level of concern around domestic and international travel restrictions has severely decreased traveler confidence, causing many consumers to cancel the entirety of their holiday itineraries for 2020 and possibly in to 2021. To stop this trend from continuing to accelerate, travel companies need to be as flexible as possible, even if that does mean cutting off valuable revenue streams in the process.

American Airlines and Delta Air Lines increase flexibility to stay competitive

Delta Air Lines and American Airlines have recently introduced greater flexibility to increase their chances of a successful recovery. The two goliaths of the US airline industry joined United Airlines in ending an infamous $200 change fee on domestic tickets that had been a source of frustration for customers. Last year, Delta accumulated US$830m in change fees, more than any other US carrier. After suffering a pre-tax loss of US$7bn in Q2 2020, the last thing Delta needs is to be closing off such a valuable revenue stream. However, the US airline industry was already hyper competitive pre-COVID-19, and with airlines now battling for dominance in a severely reduced market, airlines such as Delta have no choice but to match competitor offerings, or risk being left behind permanently.

The lodging industry has also realized the need for change

Major players in the lodging industry have also been chopping and changing their policies to provide customers with more flexibility throughout the pandemic. Airbnb has remained proactive in terms of updating its policies on a regular basis. Reservations for stays made on or before 14 March 2020, with a check-in date between 14 March 2020 and 15 October 2020, can cancel for free before check-in. The company will then review this policy on the 15th of September and will extend the free cancellation period beyond October if necessary.

This kind of flexibility will be increasingly adopted. Although cancellation and change fees help boost major travel companies’ top lines, flexibility is now a necessity for unsure travelers. Companies will now have to cater for this need as supply is undoubtedly exceeding demand in all areas of travel and tourism, creating a buyer’s market in the process.

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