Managing change: How to ride out the downturn and emerge stronger

Companies are taking the opportunity in the downturn to review their strategies, and making painful but necessary changes.

P@SSPORT was at ITB Berlin, scouting out what some organisations are doing to ensure they emerge stronger.

While the talk on the floor at ITB Berlin was more about rates (how low have they gone and how low can they go) and special offers (who's giving what away with talk focused on Thailand which is pulling out all stops to revitalise its tourism industry), the conversations at the forums and workshops happening in tandem with the fair was how to ride out the current downturn and manage change so as to emerge stronger after the recovery.

At PhoCusWright@ITB, there was a lot of discussion focused on how companies must balance the optimism necessary to motivate troops and drive performance with the reality of a business slump.

It was a question posed by Mr Gene Quinn, Chairman of PhoCusWright Inc, during his panel on "Street Talk. VC Talk. Walk The Talk" when he asked his panelists, how do you stay and keep optimistic when your business may have dropped 50 per cent?

Responded Mr Jason Katz, Founding Partner of Kings Park Capital LLP, investors in the leisure sector, "It is important to have straight conversations as early as possible. Tell people how it really is but then focus on the opportunities."

And to him, the opportunities for investments are in domestic travel, new destinations, budget travel and focus on markets that are performing better than others. For example, he said, Turkey and North Africa were doing better than Spain.

Don't get stuck in the middle

Mr Dale Moss, Managing Director of Open Skies, the British Airways' new all-business class airline that flies from New York to Paris and Amsterdam, said in a business crunch, "stuck in the middle is not the place to be".

As such, companies must either move to the top or the bottom or find a specialised niche. Which is why with Open Skies, British Airways decided to buck the trend and launched a premium-plus airline that would fly only between New York and Paris and Amsterdam, a product it says is right for the time.

Quoting John Lennon's "Life is what happens while you're busy making plans", Mr Moss said it was difficult to make plans in such a fluid environment. "You can have all kinds of planning scenarios, but who could have planned for a scenario such as today?"

Today, the bottom has fallen out of the travel market and bottom lines are being impacted across all sectors, and no one knows when the market will recover.

Calling this "the most exciting time in my life", Mr Moss, a British Airways veteran before he was called to launch Open Skies, "Now you have a chance to make a difference. The people who hide will not be there when the sun comes out."

He added, "It's not about size, but adaptability.

And even though at least two all-premium airlines have gone bust recently - Max Jet and Silver Jet, Mr Moss said Open Skies was bucking the trend. "In the past five weeks, bookings have gone up. On the Paris- New York sector, we had 10 per cent market share. In January, we had 33 per cent and in February, 35 per cent. We are up 10 per cent.

"If we don't make sense in this environment, we should get out."

Take the pain and get the right structure in place

Mr Richard Leutwyler, President, Utell Hotels & Resorts, said the next big thing for travel companies is "trying to find out where is the bottom, how do you profit from the bottom and how do you change direction within to get new revenue share and a bigger share of the wallet"?

Talking to P@SSPORT at ITB Berlin, Mr Leutwyler said companies have to make sure resources are aligned to get the organisation through the downturn.

"It's about doing the right thing for the customers, organization and its people."

Mr Leutwyler added, "You have to ask which part is doing well, which part has to change. Every company has to look at things that perhaps they needed to in the past but this crisis has given them the impetus to do it now.

"You have to have the right structure going forward."

With the reorganization, Pegasus Solutions has named Joseph "Bill" Nicholson its chief operating officer and president of reservation and distribution services. Nicholson, who was the second employee hired during Pegasus' start-up phase 20 years ago, is a former president at SynXis, a distribution consultant.

"The idea is to align our product strategy with our customer needs. Bill will be focused on technology and delivering it on time, efficiently and effectively while my role will be looking after customers."

Utell represents more than 1.3 million rooms on six continents and late last year, reported strong year-on-year revenue increases for its top global hotels, with some top customers reporting gains as high as 68 per cent.

In difficult times such as these, the critical thing is to focus on the customers, work smarter, not harder and continue innovating, said Mr Leutwyler.

"What I am seeing is more demand from our customers for the opportunities to bring business in. I suppose this explains the huge interest in our road shows this year," he said.