5 Moves Travel Brands Can Take to Prepare for a Recession

While a recession is not necessarily a sure thing in 2023, the potential for a contraction in the year ahead continues to be the subject of much discussion and speculation among the world's top economic organizations.

For the tourism industry, that may mean arrivals slowing from 2022 growth levels of 60% to just 30% growth in 2023, according to a report from the Economist Intelligence Unit (EIU).

Though travel remains a top priority for many globetrotters, especially after years of pandemic-era restrictions, it will still likely be helpful for travel brands to prepare for tightened budgets as consumers work to make ends meet amid continually increasing interest rates and steeper prices on everything from gas to food and rent.

Here are some of the ways travel companies and brands might prepare for-and navigate- economic tightening in the new year.

Design campaigns that emphasize the many benefits of travel

It's hardly any secret by this point that there are many benefits associated with travel. Various studies over the years have found possible links between travel and reduction in stress levels and increased well-being and quality of life.

In addition to improving your mental health, travel also allows for connection with family, which as the last few years have established, is not something to be taken lightly. As brands seek to navigate 2023 and a potential economic downturn, emphasizing these benefits in marketing and promotion takes on even more importance.

"New campaigns about the pro's of prioritizing a vacation for mental health, and connection with family, as well as focusing on recession resistant niches such as honeymoons and weddings and luxury travel, will help in a challenging economic time," said Jennifer Doncsecz, CTIE, president of VIP Vacations.

Keep customers at the forefront of everything you do

When faced with challenges, companies often start looking inward and that usually means prioritizing internal financials and operations, says Sushant Trivedi, CEO of the travel company Fresh Tracks Canada.

"Unfortunately, this is done at the expense of the customer, resulting in declining customer

service levels-which further exasperates the issue," said Trivedi. "This can lead to a negative cycle that becomes difficult to get out of."

Keeping the customer at the forefront of everything you do on the other hand, can help companies refine their marketing efforts, sales efforts and even pricing strategies, says Trivedi,

Enhance your value proposition

A recession can be an anxious time for all of us, including travelers. And during such periods, it's important that travel companies work to alleviate any uncertainty or ambiguity that their customers may feel, continued Trivedi.

"Value offerings such as ease of cancellations, hassle-free refunds, or extended customer support can be the key deciding factor between booking or not booking a trip," Trivedi explained.

Dan Gellert, chief operating officer, of the flight, hotel, and car rental search engine Skiplagged offers similar advice. His tip for travel companies? Rethink pricing amid the current economic realities.

"Use this opportunity to go back to the drawing board," said Gellert. "The reality is that travel brands-specifically airlines and hotels-have gotten fat over the past decade by adding on fees and extras for things that used to be included as part of the base price."

For hotels this may even mean reexamining the now ubiquitous resort fee. Given current macroeconomic factors, consumers are going to begin questioning if they should be paying these fees," added Gellert.

Skiplagged, for instance, has seen increasingly cost-conscious consumers opting for lower-star lodgings, such as two-star accommodations to combat price increases- including resort fees. In fact, between 2021 and 2022, the platform witnessed an 18.3% increase in bookings for less pricey lodging options.

Diversify products and offerings

The coming year may also be the time for brands to expand into new markets, in an effort to increase or diversify revenue, suggested Justin Crabbe, CEO of the private jet charter platform Jettly.

"This could include adding virtual experiences or creating packages that combine multiple services such as hotels, rental cars, and flights," said Crabbe. "It's also important for travel brands to have a plan in place for when the situation does arise. This could involve cutting costs, diversifying their portfolio of offerings, and offering more flexible payment options."

For other companies and brands, diversifying over the coming year may mean expanding products or services to appeal to a new customer segment, such as adding budget-friendly options or luxury experiences to offerings, said Adeel Khan, of the premium hotel and flight search platform BusinessClass.com. This effort may also involve expanding or adding domestic offerings if they're not already available.

"During times of economic uncertainty, people may be more hesitant to travel internationally," explained Khan. "Consider focusing on promoting domestic tourism as an option for travelers looking to take a vacation closer to home."

Create emotional connections

Finally, travel brands should focus on developing customer loyalty by creating an emotional connection with travelers. This could include investing in staff training with regard to this strategy or simply offering more personalized experiences.

"This will help build trust, and create sustainable business relationships with customers," said Crabbe.

---

For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.

Topics From This Article to Explore