Why Discounting Won’t Work to Survive this Recession

Great article by Anna at Tourism Internet Marketing – what are your thoughts on discounting? Have you tried it? What were the results?

The tourism industry has often boasted of its resilience and ability to rebound after drops in demand caused by such negative factors as 9/11, SARS or natural disasters. The adaptive response most frequently deployed is generic discounting. But does this serve the individual business or the tourism community well and will it work this time?  I believe the answer is NO and for the following reasons:

1.       We’re not looking at a temporary blip in demand. Life and business, as experienced between 2003 and Q3 2008 will not return to normal. The growth in demand for discretionary services was fuelled by cheap credit, cheap energy (until 2007), and asset inflation – all unsustainable illusions based on a denial of environmental realities. Expansion in capacity (airline seats, condominiums and ocean view apartments, whether sold in wholes or fractional units, hotels and restaurants) was all based on an over estimation of demand by suppliers and consumers alike. Now only the airlines have the option to remove excess capacity from circulation by parking their vehicles in the desert. As identified by Time Magazine in February 2009 , consumers shop very differently today. As indicated by McKinsey as far back as 2007[i], boomers won’t be spending as freely after seeing their assets (first homes, second homes, pensions and equities) plummet in value; and the kids, who were supposed to be filling a major labor shortage due to retirement of the boomer workforce, will face tough competition from people old enough to be their grandparents.

2.       We are looking at fundamental changes in the nature of demand; the way consumers make decisions and respond to brand messages and the way suppliers gain their attention. Not only do consumers regularly turn their backs on advertising, they worry more about the opinions of peers or society. Sean Gregory’s article in Time identified three kinds of consumer in terms of their willingness to spend right now. In short:

  • Those that can’t (they’ve lost their job or income)
  • Those that might but won’t (they fear they might lose their job or income or are simply being prudent/cautious)
  • Those that could but still won’t (because they don’t want to send the wrong signal to peers)

3.       We are looking at deep and major changes in the source of travel demand and businesses must be more granular and refined in their approach. In their 2006 article, McKinsey showed how price sensitivity varied by a factor of 13 across regional markets and even by a factor of 3 across zip codes in the same cities. In other words, consumer behaviour cannot be predicted by macro demographics, psychographics and post code but by individual circumstance, perception and attitude. Individual consumers are demonstrating their individuality. Destinations that continue to rely on macro economic models to prioritize top ten performing countries will miss out big time. This is the time for more in-depth research into customer perceptions and motivations not less.

4.       We are also looking at fundamental shifts in the way consumers spend their free time (internet usage now exceeds TV watching for many) and the way customers are reached and influenced. Furthermore, the relative cost and ROI of various distribution channels can vary enormously as illustrated by McKinsey’s research[ii]:

anna-post1.jpg

In this context, blanket reductions in marketing spend across the board combined with a reluctance to change channels would spell disaster.

At a time when customers have ceased to trust brands; when they favor the recommendations of friends and peers over the exhortations of sales personnel; and when they can research a producer’s claims or compare supplier’s prices on their mobiles as they walk to the check out stand, loyalty cannot be bought. It can only be earned through assiduous attention to detail, through rigorous honesty, through genuine respect for the customer’s intelligence and through genuine gratitude for past business. Tough but true.

To read the full article visit:

http://tourisminternetmarketing.com/featured/why-discounting-wont-work-to-survive-this-recession/

VolunteerCard.com Launches

Global travel discount card now available exclusively for volunteer travelers

 

 January 27, 2009, Burnsville, MN — Experience all the rewards of volunteer travel and save some money at the same time.volunteercard

 

International Volunteer card (www.volunteercard.com) has launched a new product that offers volunteer tourists with discounts on travel essentials from guide books to insurance, and 24-hour traveler assistance  from anywhere in the world.  

 

Voluntourism has surged in popularity among travelers of all ages.  Gen Y and retirees alike are attracted such travel for the opportunity it provides to see the world and make a difference in the local communities they visit.  According to the Adventure Travel Trade Association, 15 million (4%) of US travelers, have taken a volunteer vacation.  In spite of the softening economic climate, this segment is growing three times faster than any other in the travel industry.  

 

Now volunteer travelers can benefit from over 100,000 products and services offering up to 50% discounts with the International Volunteer Card.  Sample savings include:

 

·         International Airfare: discounts range across 13 major international airlines

·         Domestic Airfare: 5% on all domestic US flights. (United Airlines)

·         Travel Gear: 5% – 30%  off Backcountry, Rockport, Avis, Eddie Bauer, Sports Authority

·         Travelex Currency Exchange: No Exchange Fees (coming soon)

·         Park and Fly: 50% off

·         Travel Guide Books: 25% off Lonely Planet

·         Passport and Visa Services: 20% off A Briggs

·         Luggage and Travel Accessories: 5% – 25% savings at XSBaggage, Samsonite, Ebay

·         Car Rental: 5% – 30% discount at Avis, Alamo, Hertz

·         Electronics: 40% off Philips electronics

·         Shopping: 10% savings at Target

·         International Phone Card: $5 off eKit

 

Cardholders will benefit from 24/7 travel assistance from a dedicated service line. Whether they lose luggage, need emergency cash transfers, seek passport assistance, the Volunteer Travel claims team can help members with any travel issues no matter where they are in the world through a free collect call phone number. 

 

The Volunteer Travel card also includes travel insurance coverage for all volunteer trips taken within the annual membership period – not just for a single trip. Travelers can select from a set of insurance coverage options upon purchasing the card.

 

Six Volunteer Travel cards with varying ranges of benefits and discounts are available.  Prices range from $25 for a Basic individual card to $85 for a Premium family card.  The cards are valid for purchases made in the US, and are good for one year, renewable annually.  Visit www.volunteercard.com  for more details and to apply for the card. 

 

Volunteer organizations can join the Volunteer Travel card affiliate program and receive commissions for the number of cards that they sell.  Affiliates will be provided with links to www.volunteercard.com to help drive traffic to their own websites.  Volunteer organizations interested in becoming affiliates should call     877-865-6877     or e-mail contact@volunteercard.com for more information.