Saturday, April 18, 2020

COVID-19 and Ski Resorts (V). Lessons from Mad Men

In my marketing classes at university, my students really like it when I use videos from TV-shows (from South Park to Yes Minister) as teaching resources.
Now, during the COVID-19 lockdown, I am re-watching one of my favorites, Mad Men, looking for inspiration for my next article and I was really surprised by how relevant this series actually is for what I’m currently working on.
Mad Men is an American period drama television series created by Matthew Weiner. Mad Men is set in '60 America at the fictional Sterling Cooper advertising agency on Madison Avenue in Manhattan, New York City. The series' main character is advertising Creative Director Don Draper (played by Jon Hamm).

In the last episode of the first season, we find one of the greatest pitches ever shown on TV.
"In Greek, ‘nostalgia’ literally means ‘the pain from an old wound (...) This device isn’t a spaceship, it’s a time machine. It takes us to a place where we ache to go again", Don Draper: (Mad Men S1: E13).

Having our customers at the center of our destination marketing strategy requires an understanding of the main phases of the Tourist Life Cycle – from the beginning of the inspiration process until after the return.
The life cycle of the tourist trip consists of three phases.
  • Before the trip. This is the inspiration phase, but also the decision and purchase phase. Tourists look for information about the places they would like to go to. In this phase, destination marketing teams are the key to easing the start of the process keeping the consumer inspired to choose our destination.
  • During the trip. This is the experiential moment by nature. It runs from the moment the physical journey begins until the moment one returns to one’s usual place of residence. Tourists’ perception of a destination is made up of all the services consumed and each of the experiences. To a great extent, this is what determines the final degree of satisfaction related to the trip.
  • After the trip. This phase is becoming increasingly important. Communication with tourists must be maintained in order to get their opinion on the trip.
I wrote in my previous article that, under the current circumstances, we must focus our efforts on the inspiration phase of the customer journey. People are dreaming about their future trips to our ski resorts (#dreamnowtravellater) so we must keep them inspired with good memories. It is time to keep our guests emotionally linked to our destinations.
And in the 21st century, social media platforms like Twitter, Facebook, YouTube, or Instagram have entirely changed the way marketers reach their audiences. If you’re a social media marketing professional, you’re well aware that selecting a social media platform is all about understanding where your audience is and which one is the most impactful platform to achieve your destination goals.
Instagram is now an integral part of the social media landscape. It is the fastest growing platform in the history of social media.

"Instagram marketing is no longer something to consider — it’s just something to do. It comes with the job now. Those who understand this are no longer asking themselves WHY they should do it, but rather HOW they should do it correctly in order to get the results they want", Iconosquore. Instagram Marketing Trends & Benchmarks Report 2019.

Instagram is a visual platform where people come to share moments, find passions, and most importantly, get inspired.
Instagram is producing higher engagement rates for destinations compared to Twitter, YouTube, and Facebook.
Instagram is the new "Carousel", a time machine taking our customers to a place where they want to go again and our prescriptors/influencers are the ones to help us play the show.
Nich-Influencers in the 10k-100k follower range offers the best combination of engagement and broad reach, that exceed influencers with higher followers. When choosing to collaborate with this influencer segment, you are looking also for the quality of interactions.

Why Nich-influencers?
  • Cost-efficient: Nich-influencers come at a much lower cost.
  • Better than word of mouth: Consumers have higher chances of listening to recommendations from this kind of influencers than an average person.
  • More authentic: They are seen as more credible sources in the eyes of followers, compared to other sources.
  • Higher engagement rate: Due to their niche focus, these influencers tend to have higher engagement rates on their posts.
So, gather your team of influencers, and keep your guests on the loop. Because the "show must go on"...

The Ski Racing Podcast: 2020 Season Review Part 1

Thursday, April 9, 2020

COVID-19 and Ski Resorts (IV). The Road to Recovery

The 2020 outbreak of COVID-19 has produced the longest shutdown of tourism on record (and we don't know how long it will last).
The Tourism sector, and ski resorts particularly, are severely affected by the current Corona crisis, and the global spread of the pandemic is going to impose a significant dampening effect on the rate of recovery.

Three elements will be decisive in the process of recovery of tourist demand in general and in ski resorts in particular:
  • Fear management and confidence-building
Risk and fear may alter tourists' travel plans, influence their choice of destinations and, in some cases, lead them to decide not to travel. How countries and destinations manage the crisis and get out of it will be a fundamental element in their recovery process.
The speed and strength of the recovery will depend on the perception of risk, and the guarantees that destinations can offer to visitors.
Mature markets may adopt a more cautious approach to travel, looking for safe destinations. Proximity and moving within a socio-culturally similar geographical space can be decisive elements in increasing the sense of security for these markets.
The worst-case scenario for recovery would be that COVID-19 was perceived by people like an open crisis with governments that do not control the outbreak.
Closed borders and restrictions to tourism will be still in place until is completely safe to travel again.

  • The Economy
Safety and security represent only a part of the bundle of issues producing weak travel demand. Coronavirus is a global economic catastrophe. Figures from countries around the world show we are seeing a massive surge in unemployment, unprecedented in historical terms.
Current uncertainty defies all efforts to forecast where the economy may go in the future.
High unemployment rates and people's fear of losing their jobs lead to lower consumption, starting a cycle that will lead to an economic depression. Concerns about the economy falling consumer confidence and consumer concerns about not having enough money to travel. Reticences to spend will slow recovery long after the direct crisis ends.
After more than three weeks of severe restrictions due to the Corona crisis, surveys are beginning to show a declining mood in society, with more people expecting a very negative or negative economic development in the future.
As a consequence, more people will limit their consumption after the crisis. This would particularly affect travel, shopping, restaurants and cafes, and the purchase of luxury goods. In addition to consumption, the possibility/desire to go on vacation this summer also decreases as uncertainty about the future increases. For people who still want to go on vacation, most of them will choose to travel within their own country.
But we can be optimistic. The good news for ski resorts is skiing tourism has shown in previous situations that it is more resilient to the crisis than other sectors in the tourism industry. Travel is related to income and the family income of skiers is higher on average than that of other tourism models.
  • Self-reward. The desire to travel
The coronavirus lockdown and mass quarantines are typified to be long periods of hardship and strict modification of normal behavior patterns. Evidence shows that a sharp period of restriction results in an increased desire to travel. Travel is considered a core necessity by a large share of the western population and a fundamental part of their way of life. Tourists are mainly motivated by the desire to escape, to "get away from it all". One of the key characteristics of the XXI century tourists is their need to escape from everyday routines and issues in a bid to achieve some form of fulfillment. The current trend of tourist experiences include some degree of escapism, and many people would express the need to travel away as the main reason for taking a holiday.
Skiing Tourism provides an opportunity for the population who are seeking self-fulfillment and excitement through participating in physically and mentally stimulating activities while traveling to breathtaking mountainous areas. For passionate skiers travel to ski resorts to ski is the ultimate form of self-reward or self-indulgence.

Walking the road to recovery will require a complex roadbook full of recommendations.

  • Focus in local and regional markets
Restrictions to travel will be in place for a long time. So, local and regional markets (drive distance source markets) will rebound faster once the crisis ends. The rate of recovery will be in direct proportion to the extent and magnitude of privation that has been felt by the population.
Long haul markets will not recover for at least a year, and there is great uncertainty in how airlines are going to face this crisis and how it is going to affect our way of traveling.
Based on current developments, and notwithstanding the high level of ongoing uncertainty regarding the pandemic, IATA estimates that industry-wide RPKs (Revenue Passenger Kilometers) will contract by almost 40% in 2020, with the decline broad-based across all regions. The rebound in air travel after COVID-19 is expected to take longer than the recovery seen in previous crises due to the unprecedented travel restrictions around the world and the global recession which has been triggered as businesses and borders are closed.

  • Inspire
We must focus our efforts on the inspiration phase of the customer journey. People are dreaming (#dreamnowtravellater) so keep them inspired with good memories. It is time to keep our clients emotionally linked to our destinations. With people isolated and plenty of time to surf the internet, social media offers a tremendous opportunity to attract and keep on the loop a significant share of this pent-up demand. Markets are not yet receptive to promotional campaigns but that will change immediately once the outbreak passes. Ski Resorts must be prepared with inspiring promotional campaigns ready to be launched in short notice.
  • B2C
The answer to the crisis is Personalization. Guests demand a customer journey more personalized, emotional, on a one-to-one level. Restrictions to travel encourage individual travel. Transactions will be more impulsive and instantaneous, and for these times Business-to-consumer marketing will be key. B2C marketing refers to the tactics and strategies in which a destination promotes its products and services to individual customers. B2C marketing efforts will tend to focus on building trust and inspiring desire, and rely strongly on the power of emotion and shared values. The biggest challenge for ski resorts B2C marketers is reaching and engaging their customers and understand how to break through all the noise to reach them. And also establishing an emotional connection with your customers means more work and a bigger investment in personal terms. The easier the planning and booking process for the customer is, the better. It must require lower levels of investment for them in terms of time and money. And we must add to the equation flexibility, to pay and cancel.

I am writing this from Tirol. Tourism is very important for Austria, and ski resorts a fundamental part of Tirol's economy. Businesses are suffering and friends have already lost their jobs. It is no wonder there is despair in local businesses and companies especially taking into account that more than 80 percent of the Tourism business in Tirol are family businesses.
But there is room for hope. On Tuesday the most extreme measures of the quarantine were lowered: a breath of freedom on the way back to normality in Tirol. You can go for a walk in the fresh air and leave the limits of your municipality of residence. The city of Innsbruck reopened its parks and gardens. Definitely a first step on the long road to recovery.

Tuesday, April 7, 2020

Top 10 Crashes on the Freeride World Tour 2020

Watch the top 10 Crashes of the Freeride World Tour 2019 starring by Yan Rausis, Tim Durtschi, Aymar Navarro, Elisabeth Gerritzen, Emma Patterson, Jack Nichols, Leo Slemett, Evelina Nilsson, Logan Pehota, and Wadeck Gorak.

Thursday, April 2, 2020

Vail Resorts Announces Two Month Furloughs

On April 1, Vail Resorts announced the company would be making a large reduction in expenses over the next few months.
In a public letter, CEO Rob Katz explained they were forced to adopt difficult business decisions as a result of the ongoing impacts of COVID-19, including some that unfortunately affect the Company's U.S. employees.
Vail Resorts will furlough most hourly employees, and all salaried employees in the U.S. will receive a reduction in pay.
The company will also pause payments to Katz and its board of directors, and dividend payouts to shareholders will not take place in July and October for the first time since the inception of Vail Resorts’ common stock dividend in 2011.

We continue to find ourselves living through an unprecedented time as the situation with COVID-19 grows more challenging, with everyone across our planet now dealing with very real and significant health risks and impacts. This crisis has hit the travel industry particularly hard. Currently, all of our mountains, lodging, retail, and transportation businesses are shut down and it is becoming less clear when things will start to reopen again. We reported two weeks ago that the early closure of our North American operations will cost the Company at least $180 million to $200 million in lost profitability in our third quarter ending April.  
I am very hopeful that both the economy and travel will return to normal by the time our North American winter season opens eight months from now. However, we also need to remember that we have substantial business operations set to open over the next few months - our Australian winter season, Grand Teton Lodge Company, as well as our lodging, retail, and summer mountain operations at our North American resorts, which collectively represent more than 20% of our total revenue. With the very real possibility that the global stay-at-home orders could be extended, and travel reduced regardless, our business in May through October is at risk. We will work hard to reopen as soon as practical, but much of this is now outside of our control.  
Because of these realities and to ensure that we can navigate the financial challenges ahead, we are taking certain measures, including some that will, unfortunately, affect each of our U.S. employees: 

  • We are furloughing nearly all of our U.S year-round hourly employees as of April 4, 2020, for at least the next one to two months, without pay, but with full healthcare coverage for any impacted employee currently enrolled (the Company will pay all premiums). 
  • We are implementing a six-month salary reduction for all U.S. salaried employees that starts at 5% for those up to Grade 27, 7.5% for Grades 28/29, 10% for Grades 30/31, and then rises up to a 25% reduction for our most senior executives. 
  • I am giving up 100% of my salary during the next six months. 
  • We are eliminating 100% of the cash compensation for members of our Board of Directors for six months.   
  • We are suspending the Company’s 401(k) match for the next six months. 
  • We are reducing our capital expenditures by $80-$85 million, with the intention to defer all new chair lifts, terrain expansions, and other mountain improvements, while protecting the vast majority of our maintenance capital spending. 
  • We are eliminating our June and September dividends to shareholders, saving the Company more than $140 million. 
I recognize this is very disappointing news to be receiving and I had hoped we would not have to take this action. But with each passing week, the financial consequences have become more apparent. To our year-round hourly employees, I am so disappointed that the vast majority of you have not been able to work these past three weeks and I assure you we will end the furlough as soon as possible once we have clarity on our business reopening. To our year-round salaried employees, who are working from home, in many cases harder than ever, I truly am sorry to have to ask you to give even more by accepting a salary reduction - we are asking everyone to accept some sacrifice so that we weather this storm together and are ready to come back strong for next winter. For those of you with questions, your leader will be reaching out to discuss the situation with you over the coming days.  
I am sure many of you are wondering if these actions will be enough. Will there be more changes coming? Once again, if I am honest with myself, I have to give the toughest answer for any CEO - I really don’t know. It’s possible that things could quickly improve. But it’s also possible these challenges may force us to materially delay or cancel our upcoming summer season. In that case, more measures might be needed.  
I have made decisions over the last few weeks that I never could have anticipated in my nearly 30 years working in the ski business. I recognize the impact of today’s decisions on you, and I do not take them lightly. I am humbled and grateful for your passion and dedication to each other, our communities and our industry – it's what makes our sport and this Company so special. Please know, I am fully committed to help steward our Company and our entire industry forward so we can all continue to thrive in the mountains for years to come. During this challenging time, please continue to prioritize your health, safety, and wellbeing. 

Vail Resorts is the leading global mountain resort operator. Vail Resorts’ subsidiaries operate 37 world-class mountain resorts and urban ski areas, including Vail, Beaver Creek, Breckenridge, Keystone and Crested Butte in Colorado; Park City in Utah; Heavenly, Northstar, and Kirkwood in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in British Columbia, Canada; Perisher, Falls Creek and Hotham in Australia; Stowe, Mount Snow, Okemo in Vermont; Hunter Mountain in New York; Mount Sunapee, Attitash, Wildcat and Crotched in New Hampshire; Stevens Pass in Washington; Liberty, Roundtop, Whitetail, Jack Frost and Big Boulder in Pennsylvania; Alpine Valley, Boston Mills, Brandywine and Mad River in Ohio; Hidden Valley and Snow Creek in Missouri; Wilmot in Wisconsin; Afton Alps in Minnesota; Mt. Brighton in Michigan; and Paoli Peaks in Indiana.

Wednesday, April 1, 2020

COVID-19 and Ski Resorts (III). Riding Uncharted Mountains

"A crisis can bring out the best - and worst - in a person, a country, or an organization", Terry O'Reilly

COVID-19 is the most significant crisis of our lifetime. We are on the way to the hardest social and economic crisis we have ever experienced after World War II, a case only then comparable to that of the post-war period.
Taking into account the introduction of travel restrictions across the world due to the COVID-19, the World Tourism Organization (UNWTO) expects that international tourist arrivals will be down by 20% to 30% in 2020 when compared with 2019 figures. The decline in international tourism receipts (exports) is expected to be in the range of US$300-450 billion, almost one-third of the US$ 1.5 trillion generated in 2019. Putting this into context, UNWTO notes that in 2009, on the back of the global economic crisis, international tourist arrivals declined by 4%.
Gregg Blanchard of surveyed resort marketers to measure the state of marketing amid the COVID-19 pandemic.
About 70 respondents shared where they were in terms of financial impact, season pass sales, marketing budget, and more. Overall 93% of respondents were “somewhat”, “very”, or “extremely concerned” given the current situation. 
Asked about the overall marketing strategy and outreach at the moment, none of the ski resorts is pushing out a lot of promotional messages and 27% aren’t pushing out any marketing at all, putting everything in hold. 
Asked about their Season Pass strategy, 56% of the ski resorts surveyed had pushed pause on all season pass marketing but 60% are still selling them. Gregg Blanchard thinks it is a perfect anecdote about our current dilemma as ski resort marketers: "our products are still for sale, but we feel uncomfortable promoting them to our audiences right now". We should understand ski resorts are becoming more dependant on advance sales for cash flow.

During these times of uncertainty, it is more important than ever to connect with your current and future customers.

Tourism has proven to be among the most resilient industries and is called to lead the future recovery. After a long period of isolation, the desire to travel will be greater than ever. Although mountain destinations, and all those that offer direct contact with the natural environment- and a greater sense of freedom-, will be one of the most favored, behavior patterns can vary dramatically compared to pre-crisis times. And convincing people to book again is going to be challenging despite customers want to go back to our mountain destinations when they will have the opportunity.

"COVID-19 will go away. At that point in time, it will be imperative that your resort marketing team evaluate the landscape and ensure that you are re-entering the market in a way that will bring business levels back up to normal while remaining sensitive to any changes that may have occurred to the ski vacation landscape", ORIGIN

Skiers are more likely to stay local. This will create an opportunity for local destinations to increase its share market. Regional drive and short-haul destinations will likely get a relative boost over International long-haul destinations. Travelers will initially be very cautious and long-haul travel will take longer to recover.

Destinations that rely heavily on large-scale operators, groups, and MICE are most at risk (rely on the events to drive demand was a good thing in the past but under the current circumstances and possible restrictions is not). Everyone’s on shock right now, and no-one has the answer as to when this crisis will be over or knows the route book to sail in these unchartered waters. Ski Resorts' recovery will require a strategic, research-based, creative and innovative approach.

I think under the current circumstances we must combine a tactical mindset in the short term with a more strategic approach in the midterm.

One more thing. During the lockdown, people are more active on social media than ever so it is a great opportunity to keep in touch with your customers.
It's not right to keep posting as if everything is normal but going quiet on social media is also not a good plan.
You should maintain your Brand presence on social media.
Activate a positive approach (sharing, for instance, inspiring photos and videos of the season) to your digital content to remain top of mind with your guests, and niche markets.
But we will talk about that in a more extended way in our next article. 

To be continued...