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Making money without tourists

June 19, 2020
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The nationwide lockdown restrictions in response to the Covid-19 pandemic instantly halted the plans of millions of UK residents hoping to jet off to warmer shores this summer.

Making money without tourists

Even more critically, lockdown prompted a drastic drop in the number of inbound tourists visiting the UK in what is normally the busiest season, creating the biggest slump in international tourism since the 1950s.

With the immediate severity of these regulations sending shockwaves throughout just about every sector in the UK, the airline and tourism industries were among the first to bear the brunt of the pandemic. As a result of airport closures and travel restrictions, air travel reduced by a whopping 97% and VisitBritain witnessed a £37.2 billion loss of income. Amidst the collateral damage created by these preventative measures was the loss of income to millions of small and medium-sized enterprises (SMEs), with 80% of SMEs seeing their incoming revenues decline since Covid-19 hit UK shores.

Despite government funding interventions and a tentative reopening of airports and public venues, many small and medium-sized businesses are still struggling to economically tide themselves through this uncertain time. The tourism economy in the UK is not expected to pick up to its pre-Covid numbers until 2021, so now is the time to think creatively about how businesses can make money without relying on the levels of footfall that are normally seen during these peak tourist periods.

The nosedive of the tourism industry

The tourism sector was set to be the UK’s fastest-growing industry. In a normal year, tourism in London comprises roughly 10% of the city's gross income, with tourists contributing around £15 million a year to the city's economy. This figure jumps up to £127 billion a year when accounting for the profits from tourism for the whole of the UK, with the industry propping up around 8% of the UK’s total workforce through the employment of around 200,000 SMEs. However, the economic consequences of the Covid-19 pandemic have meant that millions of people across the UK who depend on the tourism industry for a living have instantly seen their primary sources of income slashed.

Inbound tourism to the UK has witnessed a 55% drop, while domestic tourism has fallen by 24%. This massive fall in revenue has led Riddell Graham, director of industry and destination development for VisitScotland, to admit that the tourism industry has effectively ‘fallen off a cliff’ with there not being ‘one part of the industry that’s not been affected severely’ by the pandemic. With the peak tourist season in the UK starting from Easter and lasting until around August to September, it’s safe to say that the Covid-19 pandemic couldn’t have struck the tourist industry at a less fortunate time; some have even referred to navigating the current tourism climate as ‘facing three winters’.

Among the hardest-hit places in the UK are destinations that have been built primarily on tourism. Around a third of all jobs in the South Lakeland area of the Lake District have been put at risk, along with 27,000 jobs in the Pembrokeshire and Cotswolds area, which illustrates how vulnerable these tourism-reliant areas have become. In addition to rural places of interest, coastal communities in cities like Southhampton and Blackpool also stand to be particularly endangered by these dropping numbers, as their main revenue stream comes from seasonal visitors and social distancing is harder to enforce in attractions like amusement arcades and piers.

However, from Strand to Skegness, no destination is immune from the brunt of Covid-19’s economic impact. The horizontal nature of the tourism supply chain means that if any crucial link in the ecosystem is broken, it can affect a myriad of other businesses that rely on their services for income. Even though Covid-19 related guidelines are being increasingly relaxed, the tourism industry in the UK isn’t expected to return to normal for a while, and this is forcing everywhere from national parks to inner-city pubs to rethink their business strategies if they want to stand a chance of keeping their heads above water.

The need for creative solutions

As forbidding as this new reality may sound, the tourism industry is a resilient one and has bounced back from many previous bumps in the road - although granted these were not of the same magnitude as the current crisis. Government interventions in the form of grants and furlough packages have helped most SMEs tide themselves over through the most difficult times, but the billions of pounds invested in these businesses will mean nothing if they can’t sustain themselves until the tourism industry starts naturally picking up again.

This highlights the need for creative and innovative solutions that can help substitute the tourist drought that most of the UK will be grappling with for some time; self-sufficiency will be key when government money can no longer provide businesses with assistance. This includes deploying a range of strategies that work at reassuring consumers’ Covid-related anxieties while they slowly navigate this stage of the new normal. It also requires thinking outside of the box thinking to capture the imagination of local populations, as well as harnessing different forms of technology to stay relevant and to reach out to consumers that are still socially distancing and working at home.

People are looking local

Although UK residents have been adhering to strict social distancing measures and limiting their time in public spaces, the 4th of July, otherwise known as ‘Super Saturday’, marked the first significant easing of lockdown measures, with pubs and bars finally allowed to open up again for business. This was followed by other public facilities like indoor gyms and pools re-opening on the 25th of July, and employers being given the choice to bring their workforce back to the office from the 1st of August. Encouraging the population to slowly and cautiously re-integrate themselves into public spaces will likely be a great thing for local businesses, as footfall in town centres will increase and more people will start shopping locally and using public services again.

People are also more likely to be staying local because of fears over travelling long distances using public transport. As this report by TransportFocus outlines, the public is still hesitant to travel long distances by public transport in trains and buses; almost all individuals surveyed reported that they were concerned about either catching the virus or being a carrier and infecting those around them. This suggests that most people are likely to stay close to home when carrying out activities like shopping or using public services, which emphasises the importance of reaching out to your local community.

In addition to this, growing swathes of the population are opting for locally sourced and produced products both in an effort to support smaller local business under financial pressure and to alleviate their own anxieties about products travelling from countries where the coronavirus is less contained. For these reasons, now is a better time than ever to reach out to your local consumer base and provide them with discounts and incentives which could encourage their loyalty and help your business gain a competitive advantage.

How to create loyal local customers

Research has shown that 45% of people’s consumer behaviour is repeated on a daily basis, and in this current climate, people appear to be searching for structural patterns that help them make sense of this new reality. This means that now is a great time to tap into new consumer groups and to integrate your business into their new routine. A great way to do this is to offer special discounts on products and services through loyalty cards or tokens. Not only does this make your business more attractive to the local community, but it’s also an effective way to encourage repeat purchasing. As this report from the Harvard Business Review shows, a well-designed rewards program can provide an incentive for more frequent purchases, and this can help to build the foundation for more local customers.

A reward or discount system of this nature can work effectively with both online or in-store purchases, and if you operate a service-based business like a salon, bar, or restaurant, offering your customers discount vouchers could be a great excuse for them to treat themselves now that the lockdown guidelines are relaxing and they are allowed to safely use your services.

Covid-proof your business

However, offering all the free haircuts in the world is only going to get you so far if customers have little faith in the safety of your establishment. As public anxiety around the virus remains high, it’s important to do everything under your control to make your business adhere to the current social distancing guidelines to help put your customers’ minds at ease. It’s essential that you make sure you stay in line with current UK legal regulations regarding Covid-19 and social distancing; Covid-proofing your business will also help to encourage more business from local customers while keeping the risk of contamination as low as possible.

Stocking up an anti-bac, keeping ample supplies for customers and employees to use, introducing cashless payment systems to avoid cross-contamination that may occur with physical currency, creating a cohesive signage system to keep the customer contact to a minimum, and enforcing table service and scannable or single-use menus are all great ways to make consumers feel safer and should incentivise them to use your services.

Also, if you are lucky enough to own outdoor space, make sure to take advantage of this area as outdoor spaces are (for obvious reasons) currently incredibly valuable assets.

Think outside of the box

The coronavirus is causing exponential damage to most SMEs in the UK, so it’s becoming more important than ever to deploy tactics that help your business to rise above the competition. Being adaptable and creative is always a good way to capture the imagination of potential consumers, and, now, in the face of these turbulent times, it’s essential to make sure you stay relevant.

Due to the lockdown restrictions that have been imposed since late March, most people have been experiencing a large increase in their leisure time as they continue to spend more time indoors. As levels of boredom are on the increase, many have been pushed into a phase of forced experimentation. This phase is prompting an increasing number of people to look to alternatives to businesses they have historically relied on, and now is therefore a fertile time for businesses to switch up their strategies to try and meet these evolving consumer needs.

People are also looking for better ways to live their lives, so if it fits your business, tapping into this self-improvement and self-optimization hype may be a useful way to capture the imagination of growing portions of consumers. Additionally, providing consumers with fun and stimulating products or socially distanced experiences will be a great way to counteract the boredom they have been experiencing under lookdown, while also encouraging local spending. For example, a restaurant in Lakeland, Florida has created a bingo card that encourages customers to purchase from local businesses, incentivising customers with the opportunity of getting their name entered into a draw to win a cash prize. As well as providing the local community with a fun way to get involved with the nearby businesses, it helps to build a buzz around the brand which improves its reputation and exposes its products and services to more people.

Sell a skill

With the increased amount of time people have on their hands along with the pressure of another economic downturn, an increasing proportion of the population is seeking productive ways to spend time during their lockdown. This, among other things, has encouraged a growing appetite for gaining new skills through processes like ‘upskilling’.

Whether you’re a business owner or have a particular level of expertise about the industry you’re in, 1:1 coaching is proving to be an increasingly viable and lucrative way to supplement the loss of income caused by the coronavirus. Platforms like Teachable and Jolt are great ways to reach people who are interested in learning new skills, and sharing your knowledge is also a fulfilling way to help people along their self-improvement journey while tiding yourself over financially through these unstable times. Another advantage of this is that online teaching can be conducted online in adherence with even the strictest social distancing guidelines, and flexible working hours mean that it’s easy to work around a busy schedule.

Harness technology and social media

Throughout the Covid-19 pandemic, the average person in the UK has been spending an average of 4 hours a day on the internet. This means that your business is missing a trick if you aren’t using digital platforms and social media to maintain an online presence to keep in touch with remaining customers and to try and reach out to new ones. Whether this means moving parts of your business online, selling products through online retail platforms, or putting advertisements on social media, there are multiple ways you can harness technology to improve the relevance of your business and to boost profits.

Depending on what goods or services your business offers, most SMEs are able to move at least part of their services online to keep producing revenue and to stay connected to their consumers. Whether this means hosting yoga and fitness classes on zoom, virtual ‘Hair Parties’ as an alternative to the in-salon experience, or even virtual safaris or city tours through Google Tour Creator, there are many ways to bring your business to the comfort of people's bedrooms. For example, a local market in Belgium has moved all of their products online and are enabling customers to pick up their orders through a ‘click-and-collect’ service every Friday, so the town's local produce can still find it’s way to consumers.

Another important way to check in with your consumer base is through social media. In the UK, Social media platforms like Youtube, Instagram and TikTok have never been more popular. Nine out of ten adults have used one of these platforms in the last year, and 32% of adults are now spending more time viewing video sharing services that broadcast television.

So, with engagement currently at an all-time high, now is the optimal time to harness these platforms to stay connected with consumers.

Promoting the awareness of your brand through these platforms for commercial purposes is useful as it reminds your consumer base of your products and services, and gives them the opportunity to access them from the comfort of their own home. Services like GoogleAds are useful platforms for doing so because they provide small businesses with various targeting options, so it’s easier for you to reach local customers.

In addition to this, using social media for commercial purposes can be extremely useful. This is because social media sites can help you to establish a conversation between you and your consumer base, and can provide a platform for consumers to connect with each other too. This is a particularly important way to maintain brand loyalty and customer engagement until normal business eventually resumes, as it offers an opportunity to those who can’t engage with your products or services in person.

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