• March 25, 2020

Covid-19: negotiating the crisis from a supplier perspective

Covid-19: negotiating the crisis from a supplier perspective

Covid-19: negotiating the crisis from a supplier perspective 1024 683 mustbeonit

Following on from our industry leaders’ emergency Covid-19 summit earlier this month, which was focused on the agency community, we gathered a group of suppliers from hotels, DMCs, destinations and representation companies along with a couple of agencies virtually last week to discuss the challenges they are facing. Here are some of the key takeaways…

Postponements v cancellations

*Last week we reported that agencies are mostly seeing postponements rather than cancellations. The supplier community concurred with this. One hotel group said that clients were initially postponing for a couple of months, however many are now not committing to a date. Another said that clients are still looking at executing on trips at the back end of the year, while others are seeing postponements to 2021.

*Richard Waddington, chair of the Event Marketing Association (EMA) for corporate event planners, shared a few stats from a survey of EMA members – 35% said they had cancelled events, 62% had postponed and 27% had moved events to online. Half of those surveyed said they had been subject to cancellation penalties, while 20% said they hadn’t. Only 8% said their insurance had covered any losses.

*From the hotel side, policies for postponements and cancellations varied with most saying they are dealing with each event/client on a case by case basis.

*Belmond said that any group booked up until 30 June this year can use their deposit for a future booking to be taken up until end of December 2021. Another group said they are being as flexible as possible with terms and are moving events to 2021: “We have to be as flexible to make sure we don’t lose too much revenue between us.”

*Everyone is looking closely at terms and conditions for future bookings, with one adding pandemics into their force majeure clause so anything like this might be covered in future. However, it pointed out that Covid-19 can no longer be considered force majeure as it is no longer unforeseen.

*It’s easier for global hotel chains to have flexible cancellation policies than small independent hotels that may struggle to get through this crisis.

*It’s not all doom and gloom, with one hotel group reporting it had a new enquiry for 2021 for UAE, and last week for Germany and Budapest, and the week before for Japan and Bali.

DMCs and CVBs

*The news from tourist boards is that many are facing dramatic cuts, to both budgets and staff, with lay-offs happening across tourism businesses in their destinations. One destination representative said: “It’s a time for dealing with the present and trying to support people as best I can, provide feedbacks on the UK market, and take stock of our message going forward. It’s pretty tough and especially with the uncertainty of knowing when we will be open for business again.”

*Switzerland said that it is starting to see some enquiries and confirmations from China again for 2021.

*DMCs are among the worst hit. “As we are further down the chain, we have perhaps been impacted harder,” said one representative. “We have had 50% postponement and 50% cancellations. Our pipeline up until June has obviously been decimated. Those that had cancelled had only paid a small deposit towards that. We are finding clients are more likely to keep the hotel but cancel rather than postpone the ground programme. This could be because they don’t know what the ground programme will look like, and also what will still be in business after all of this.”

Education and preparing for recovery

*Much of the discussion focused on what suppliers can be doing, other than being flexible with terms, to support agencies and clients during this difficult time.

*It was agreed that most people are trying to get their own houses in order at the moment and dealing with their own challenges, so it would be insensitive to be sending out educational or sales messages. But at some point over the next few weeks, people will have more time on their hands and perhaps be more receptive to educational messages.

*One hotel group has started to put together webinar presentations to replace the face to face meetings with clients and agencies that were already in the diary.

*What else can suppliers look to be doing – virtual tours, virtual site inspections and fam trips so agents can keep their product knowledge up to date while there are no events to deliver?

*Micebook will look to see how we can support our community with this – if you have any ideas or request please email chetan@micebook.com. One request was for more communication around best practice and fairness within the supply chain and how to treat suppliers fairly during the crisis.

*What will the market look like when it does return, so suppliers can be prepared? We should look to China and Italy that are ahead of the UK as far as the pandemic is concerned. Once we start to come out of this, events are likely to be more localised initially. Availability in the Autumn period in the UK is going to be challenging. Could this encourage people to look to nearby destinations?

*Lead times may end up being really short as people will need things at the last minute, so we need to be prepared for that.

*It is important to stay engaged with customers and partners. We know this business will come back in some shape or form at some point, so we need to keep the lines of communications open and be ready with education when they want it, and to take bookings.