How to survive the coronavirus as a travel startup

The headlines say it best. Ugh.

With the COVID-19 virus spreading to dozens of countries globally, the travel industry is working frantically to both prevent the spread of the virus and navigate through heavy economic uncertainty.

Travelers are reconsidering travel plans, both to prevent infection and avoid being quarantined. Airlines have ceased flights to the hardest-hit areas and reduced capacity elsewhere; many hotels are empty or facing steep declines in occupancy; conference organizers are losing major events, some years in the making; local tour operators have far fewer customers.

There’s no sugarcoating: It’s rough out there right now.

Lean times are inevitable for the travel industry - that much is for sure. But among the furrowed speculation and fearful reports, we’ve heard recently from some of the startup founders in the Voyager HQ community who have been busy formulating ideas and plans catalyzed by the recent crisis.

We’ve been finding that in certain cases, startups in the travel industry are uniquely positioned to not only help themselves, but also valuably contribute to helping the entire industry out of this crisis. 

It’s important to remember that no crisis lasts forever and to attempt to look to the future. The companies who are nimble enough now will find new opportunities to weather the storm and thrive in the aftermath.

In the last week, around our company's NYC Clubhouse and in meetings, at gatherings of our local chapters and on Slack, our team has heard more innovative pivots than we have probably heard in the last year. We’ve found ourselves inspired by the optimism and flexibility shown by the Voyager HQ startup community in the wake of this pandemic. 

Those conversations inspired us to pen this post - we went ahead and collected some ideas and contributions from entrepreneurs in the Voyager HQ network who were willing to share how the coronavirus is affecting their businesses, and what their plan is to overcome it. 

Here's some of what they said, in what amounts to useful tips and tricks for staying afloat in these tough times.

Cut non-essential costs and don't “panic price” 

If you’re a consumer-facing startup that is able to use pricing as a lever to gin up demand, exercise caution before springing for what seems like an obvious option. Panic pricing can inadvertently reduce the value of your product and make it difficult to rebound your pricing once the crisis is under control. Take some steps to mitigate your costs first, then establish your opportunities for revenue.

Assess your P&L - what are the expense lines that you don’t need in the next three months? Cut or defer them. This may be difficult for those already running a lean or bootstrapped startup, but take a hard look at what you really need to keep things running. Consider team costs last in this assessment - you may need all hands on deck to move the ship in a direction that you need to go to weather the storm. 

After damage control and cost mitigation, focus on market share opportunities, even if that means pivoting your business model. The travel industry is hard enough to break into - now is the time to make moves in it! Some internal teams at travel enterprise who are not on damage control will be looking for ways to make an impact for the organization after the crisis ends, so that they also come out stronger on the other end of this situation. Use that wisely! 

For B2B startups, it may be tempting to lower prices or offer more concessions to prevent deals from fading. However, the best path to accelerating deal flow in these environments is similar to B2C: provide more value, rather than lower prices or refund. What else can you provide as a value-add that will sweeten the deal while keeping your revenue consistent? 

Expanding market share may seem more applicable to well-funded companies, but it really applies to the whole landscape. This is the time that defines the financial sustainability of your company. Don’t get attached to what you built. Look for the advantages your startup may have in the market.

Keep in mind that some of the most successful startups in the last decade were created during the market downturn in 2008 to 2009, including Slack, Uber, and Airbnb. Try to be creative and see how you might be able to apply your product to add value to the current global situation. Use your resources wisely and look for the bright spots.

Look for bright spots 

If your startup has a global focus, look for bright spots of travel demand. Not every area is affected by travel restrictions and flight bans. For instance, depending on your business model and market, you can switch to targeting short-haul and drive markets to maximize on interest from those who may be reluctant to get on a flight.

Another tactic is to target travelers from areas less affected by the virus. Take a methodical look at current travel conditions, and compare that with your target demographics. If you can find an overlap, you may have an opportunity. Wherever you find opportunities, you’ll need to balance pricing with market share; it’s a trade-off between maintaining your pricing power and maintaining market share in an environment where others are likely to be discounting heavily.

Think long term if you are fundraising  

Were you about to start an angel round? Tough timing. The fundraising landscape has been a big “question mark” for the travel startup industry. 

It really depends on your individual company’s value proposition, but here are some of high-level takeaways to follow that we aggregated some thoughts from the conversations across the Voyager HQ community.

• Most angels are pausing their investments. The portion of their portfolio that was going to high risk investments just got wiped out by the markets, so it’s less likely that they would participate. Deprioritize angels on your deal if you’re pushing forward with it. 
• VCs still need to deploy capital, but with a caveat. Be aware that funds are prioritizing their portfolio companies, who may need to raise a bridge to weather the crisis. This doesn’t mean that they aren’t looking for new deals, it just means there is less capital to deploy to new ventures.
• Be ready for a lower valuation offer. VCs are going to be wary short term and looking for a deal. If you’re doing a price round and need the capital, you have a lot less leverage with a lot less investors who could potentially join the round. This will drive the valuation down. Best thing you can do is focus on and pitch the long-term value of your company.
• Hold off until things calm down if you can. If you have the funds and can mitigate your burn, I would weather the storm and look at this as an opportunity.

Remember that this is temporary! Many will be reserved about investing in the travel industry. Remind investors of that long-term vision and that transportation is a space that is not going away. Consider looking for data points that show historical value of the industry and pitch this as the opportunity to increase that value. You can do this!

Lean into your expertise

The travel community has a unique perspective with many “boots on the ground” in different places around the world. So ask your suppliers/distributors/partners what is happening on their end. Because of the mixed messages travelers are receiving, it's important that you are informed and can tell them what to be fearful of and how to manage the expectations. This can help with mitigating cancellations while also keeping your team informed on the virus.

In fast moving situations like this, when news flows rapidly and often without rigorous vetting, accurate information can get diluted. In this type of climate, travel providers and facilitators can be a source of guidance and expertise for your customers and followers.

While it appears that the coronavirus is indeed more deadly than the flu, it doesn’t appear to be as deadly as SARS, the most notable recent pandemic the world faced back in 2003. As industry experts that end up serving as the trusted source, we should look to assist and be accessible to the traveler first and foremost, says Sitata founder Adam St. John. 

And don’t forget to take care of yourself, your customers, and your team with practical, classic reminders for safe practices such as frequent hand-washing and no face touching. 

With many companies insisting on remote work to avoid community spread, it's helpful to give them support for their mental and physical well-being; not everyone is used to the realities of working from home. It’s also truly prudent to avoid traveling to heavily affected areas, especially for those who already have compromised immune systems or pre-existing conditions. 

Lean into your USP

Travelers now face uncertainty and lack clarity over when, where, and how to travel. Businesses face unpredictable demand, slipping revenues, and fixed overhead costs. If your startup has a unique selling proposition that addresses some of these challenges, lean into it! If you can empower travel businesses with tools to better merchandize, segment, and market their products and services, you’ll be a valuable partner in good times and bad.

Or, perhaps there are aspects of your business model that could be tweaked a bit to increase relevance in these circumstances. Try to be creative and see how you might be able to apply your product to add new or unexpected value to the current global situation.

Partner up

Now is the time to get creative with partnerships and building relationships. Are there new ways that you might be able to market your service? New distribution channels to experiment with? Or perhaps it's about replacing lost conference meetings with virtual events or other 1:1 engagements that don't require travel. 

As you consider potential partners, look for those who may be especially hard in this climate and needing cost-cutting or short-term revenue. Make it VERY easy and affordable to sign up and you might have just found yourself a long-term partner. You're essentially arbitraging your proof-of-concept!

A great resource for startups during this crisis are the Voyager HQ Slack channels, where founders are engaged daily and looking to discuss partnerships, opportunities and ideas with fellow travel industry entrepreneurs. You can share more experiences and discuss ways to navigate current challenges virtually with members all over the world and across all segments. To join the conversation, apply to the Voyager HQ digital startup membership here.

Be transparent

Open a dialogue with your employees, clients and investors. Be honest and transparent about the true impact on your business so that everybody knows what to expect. With customers canceling, deals slowing, and/or money evaporating, you need to get in front of it before it's too late. It’s also important that the communication comes from the top. No matter how horizontal your organization, the CEO needs to communicate with employees, clients, and investors on plans and clarify their approach. Hiding will never help; honesty will get you the visibility you need to survive.

The way you handle customer service in times of crisis says a lot about your business. Give your customers a positive experience and they’ll remember that in the future! They’ll also remember that you were flexible, empathetic and understanding, so be lenient in cancellations and try to help customers make the best of this challenging situation. 

If there’s one silver lining, it’s that this crisis is a great way to stress-test your startup's resiliency. As the world faces other major challenges, such as the climate crisis, it's a good time to prepare contingency plans and consider how your startup will not just make it through future crises, but also discover new opportunities. And wash your hands often!