In the past couple of weeks, the industry saw the demise of three well-known travel companies, being Natalie Tours’ the most spectacular. One can’t avoid wandering why this keeps happening so often… As a provider to the Russian operator long ago, I experienced their bully stand, their managers’ parvenu posse, so I’m not shocked by their fall from financial grace. We’ve seen this movie again and again, didn’t we? Remember Neva, Labirint? And it’s not only the Russians: Orizonia, Viaggi del Ventaglio, Lowcostholidays. Teorema… In one way or another, I had direct connections with all those companies, and I think I can identify a couple of common factors that might be likely causes for their death.
Scientific hypothesis
What amazes me most is the fact that all those companies spent decades developing a brand that was recognized and appreciated in their respective markets. Moreover, there were no catastrophic market changes, nor steep decline in travel traffic while those brands collapsed. True, the Crimea conflict was a huge blow to the Russian operators… But the downturn was to be expected, so why on earth would they keep contracting larger allotments season after season? I got some sort of reply to this question at a recent trade show, when I asked a Natalie Tours’ pompous sales executive how their analytics were managed. “We have the most advanced technology in the world”, she said, obviously without a clue. “So our boss has a tight control of the market”, she concluded.
Well, there you go. Поздравления! I guess you’re back to tea and borsch now, dear.
In my not so humble opinion, these are the main reasons big operators go bust…
1 – Lousy management
Can anybody argue against this? As much as they try to put the blame in macroeconomics, unfair competitors or alien invasion, CEOs get top dollar to run the show, so the responsibility is all theirs. I should split this category in two distinct types: know-it-all and movie baddie. The first one is in good faith: a smart, hard worker that very often owns the company and went from zero to hero. For that very reason, they think nobody can teach them anything, nobody knows their business better. While the market shifts at light-speed and competitors shape it with their claws, the know-it-all is adamant: my ship, my rules. Full steam ahead, Captain Ahab! Alas, once I was one of them.
The movie villain is the typical white-collar shark. No need to describe the character, we all faced one of them sooner than later. Usually they jump the sinking ship holding tight a money-made lifejacket; sometimes they even find a new vessel to commandeer towards destruction.
2 – No analytics
I have no idea how product managers were successful up to the nineties. I guess it was pure instinct and decades-long knowledge of their target customers. But I cannot comprehend, for the life of me, how can they do their job today without data analysis. And that is just a single aspect of the tour operating business! What about the rest of contracting, plus revenue management, logistics, distribution, marketing? Maybe they think that Excel jockeys instantly qualify as data analysts…
In 2016, while prospecting for REVVA, it surprised me to learn that even large travel corporations would not put to good use their data, preferring the very scientific method of sucking their finger and placing it above their heads, to check where the wind blows from. Two years later, those companies are starting to consider data-driven decision making, but are still far from implementation. Or, even worse, they’d do it backwards. Holding wet fingers to the wind still is mainstream, apparently.
Demonstration
Do me a favour: check the fastest and/or steady growing companies these days. You’ll notice they are all championing business intelligence and data analytics. Destinia, Almundo.com, BestDay, Logitravel… If you’re about to contend that those are OTAs so they have it easy, I’ll reply that traditional TOs like Rocky Mountaineer and Jet2Holidays became market leaders in part because they saw monetary value in their data. But mostly because they do things right management-wise, I’d bet.
On the other hand, ask former employees of deceased operators, and they’ll confirm that the same shortcomings doomed their jobs. Incompetent or inert management, as well as lack of analytics. It’s heartbreaking, to think that it was easier to keep those brands alive than to kill them!
Sure, there were other negative factors involved in TOs bankruptcies. But still! Do those vain arseholes expect us to believe their multi-million companies became insolvent overnight? Excuse me for oversimplifying here, but if at the helm there’s somebody so arrogantly confident in their brilliance, inevitable are bad decisions and worse planification. Which could have been avoided with analytics, if only the egomaniacs listened. There would have been no need to request financing operations from hoteliers, DMCs and airlines, no use for external funds.
And, above all, no increased holidaymakers’ distrust in the whole industry, due to the shenanigans brought courtesy of a bunch of C-Level twats with delusions of grandeur.
Thanks for reading and sharing!
Marcello Bresin