Nick Hynes, co-founder of Somo, says travel must get more personal a local
Big Interview: Travel brands must adapt because society will be changed by COVID-19
Pioneering tech entrepreneur Nick Hynes is the former CEO and founder of Overture Europe and Searchworks, which he sold to Yahoo! and TradeDoubler respectively. Before that he made his name with BA where he turned around it’s loss making Airmiles loyalty scheme business.
Now he runs his own digital experience agency Somo, which he co-founded in 2010 with business partner Carl Uminski. So he knows a thing or two about travel, digital and consumer loyalty. Lee Hayhurst spoke to him to get his take on the COVID-19 crisis, the changes it will bring for travel and how brands must react.
Beyond ‘how long is this going to go on for’, the big question the travel sector is asking itself right now is ‘how is the world going to change, and how do we adapt?
As the COVID-19 lockdown sees millions of people getting used to working from home and not travelling, as the environment appears to be benefitting and horizons are narrowed, what does this mean for travel?
Nick Hynes, founder and chief executive of digital product and experience agency Somo, says anyone who does not think the world is going to change “is in real trouble”.
As many politicians have done, he likens the coronanvirus pandemic to a war but, unlike them, not in the way it is being fought, and won, but in terms of the extent and scale of the change it will bring.
“It is a war, and hopefully this is the worst we will experience in our lifetimes. My grandfather was in the First World War at The Somme and great uncle Charlie, blown to pieces.
“We’re sitting on our sofas watching Netflix. If that’s the worst it gets we’re doing alright. But it is a war and it’s going to cause huge change.
“Anyone who doesn’t think it’s going to cause huge change is in real trouble and that’s true for any organisation, but those particularly in travel and hospitality, which have seen the most immediate impact.”
Environmental concerns to come to the fore
Hynes said all wars prompt fundamental changes in societal values, the First World War bringing universal suffrage, social justice and socialism, and the Second World War changing the balance of society through wealth distribution, education, opportunities and the consumer retail revolution.
He sees the focus on the environment, an issue that was already high on the agenda before COVID-19, being one of the main factors determining consumer values as the world returns to something like normality.
“The environment will become an even greater item on people’s agendas. People will say I have had to do without travel for months, and I’m still here, my life’s not in shreds.
“They are going to be thinking much more consciously about their travel plans, and the way in which work operates is going to radically change.
“The way in which the old world operated with people turning up to specific locations, sitting at specific desks, only having physical meetings, and having a work routine of five days out of seven is going to be re-evaluated.
“Going to work on a train or in a car, sitting there for six or seven hours, then coming home, that’s all going to change. Anyone in the business of the provision of those services who thinks we are just going to go back to that and they just have to deliver the same things is going to have a problem.
“It’s going to be about working out what consumers need are going to be. How do we provide agility and change their working lives and offer a service and proposition that works for them?”
How the COVID-19 re-set will impact travel
Hynes said this re-set will impact on different sectors within travel differently, with transport mobility suppliers like airlines and car rental firms having to rethink schedules, pricing and capacity and, in the case of the latter, facing an accelerated move towards car sharing models.
Hotel infrastructure and capacity fluctuations between the working week, weekend and leisure holiday period will have to be re-evaluated. “They will have to be much more inventive, creative and responsive according to the types of markets that they can access,” Hynes said.
“Providers will have to cut their cloth according to market demand. Responsiveness to market demand will have to go through the roof which, by its nature, means they will have to get much more digital, be much faster and do more around forecasting yields and pricing decisions.
“Look how people trade in stocks and shares, dealing in thousandths of seconds to make sure they make the right sell or buy decisions. That’s a digital environment. No travel providers are anywhere near that. They have to get serious with that because, if they don’t, I foresee continuing decline.”
Hynes offered a rosier picture for travel aggregators, which he said will be able to stand back and make decisions about where in the marketplace they offer real USP.
But he said consumer-facing brands will have to be much more flexible, both in terms of their retail shop front and back-end inventory technology platforms, so that they can work more in partnership with consumers and build stronger relationships.
“They are going to have to have a better understanding of where that consumer demand will arise and when decisions are going to have to me made to have the best intelligence for the proposition for that consumer and at what scale you can offer that.
“The only way to do that is to be close to the consumer. Brand does not give you that. You need to have much more than the fact that people are aware that you are Expedia, or booking.com. You need a much fuller data-driven understanding of the drivers of that consumer activity.
“That means those aggregators are going to have to work hand in glove with people who have deeper, more trusted relationships. This is the essence of the way in which loyalty businesses have worked with travel businesses but it’s going to have to reach another level.”
Expect greater socialisation and localisation
Hynes believes people will emerge from lockdown and restricted socialisation much more awareness of the neighbourhoods around them and the people they live close to, which could see a resurgence of word-of-mouth, and of trusted local brands that consumers endorse among each other.
And he predicted consumers will increasingly realise that booking a holiday themselves can be complex, stressful and time consuming, but that their local expert is able to do that for them for and for more or less the same price.
“Local guys may have an opportunity to do things in a much more personalised way,” he said. “Individuals will become much more orientated to their neighbourhoods around them and less about going somewhere to work. Where they live will be increasingly where they work.
“We are all sitting in our little rooms right now and those of us who are not massively introverted are starting to get a little bit stir crazy. We are going to want more socialisation. The local guys have those relationships, but must also have access to those inventory pools to be able to construct a proposition for the consumer.
“This is the complete opposite of the impact of digital to date which has forced people into a more distant relationship in every sense of the word. Society will change and human beings will want more human interaction in a positive way. Working within communities and neighbourhoods will become much more important to people.
“Today, you can give anyone access to any airline seat, any car hire company, any hotel or leisure package product all through a standard digital platform. That’s normalised. But who gets to make that transaction? It’s not going to be access that matters.
“People will want to go to a person knowing that they have access to whatever they could possibly want. They will want to go to that person to sort that part of their life out and not have to brief someone else about their travel requirements.”
Hynes added: “Providers and aggregators need to have digital platforms which enable richer packaging and pricing and inventory availability that’s relevant to the consumer.
“We can all access inventory through the internet and there will be versions of that getting better with Artificial Intelligence and chatbots, but there will be a proportion of the marketplace that does not want to go through all that and does not want to risk it or are too busy.
“That will need to be serviced by someone who has access to marketplaces but who also can deliver a much more customised, personalised service. And that could be more localised, more neighbourhood based.”
Get closer to the customer to be more effective
Hynes does not see big brands disappearing, but says they will have a different role in the marketplace and he pointed to the ‘bricks and clicks’ strategies the likes of Amazon and ebay are developing in the US, which could signal a revival of the high street.
“The future is about more physical representation, not more digital representation. It’s about local warehousing, local distribution and local shops.
“This is a fantastic opportunity for people to stand back and say ‘hang on a minute, what should we have done before and what should we be doing now for the future’.
“Let’s reflect on our strategy with the consumer – the way we package up propositions, provide credit, and pricing – from the ground up and look at the way we distribute it.
“We are talking about the largest purchase of the year. The more you know about the consumer the better deals you can offer and you won’t spam them with deals they don’t want. Seven eighths of travel is dreaming, not the reality.
“Historically it’s been about making the transaction cheaper, it’s not been about getting close to the customer. It’s been about taking costs out, efficiency, not necessarily effectiveness and certainly not about closeness to the customer and that, I believe, has to change.
“The society that comes out of COVID-19 will not be the society that went into it. The real change will come from people who get that and do something about it.”