The industry veteran and co-founder of Travel Again Advisory dives in to biggest question facing the travel industry. And can we please come up with an alternative to the term "revenge travel?" And what's going on with American Airlines, and the state of loyalty programs in general?
https://www.travelagainadvisory.com
The industry veteran and co-founder of Travel Again Advisory dives in to biggest question facing the travel industry. And can we please come up with an alternative to the term "revenge travel?" And what's going on with American Airlines, and the state of loyalty programs in general?
https://www.travelagainadvisory.com
Hi everybody, it's no Show. I'm Matt Brown, joined as always by Jeff Borman. Our guest today, mike McCormick, is the co-founder of Travel Again, which started as an independent, not-for-profit project focused on restoring traveler confidence and driving travel recovery during the height of the pandemic. Now he and his co-founder, ed Silver, consult for travel businesses of all stripes, guiding them on the data behind new travel trends, how to reach new customers, how to update your tech stack, finding new leadership, building out a partnership framework and much, much more. But such experience pales in comparison to the wisdom that comes only with true suffering and an understanding of deep loss. Yes, that's right, he is a Philadelphia sports fan, but more on that later. Mike McCormick, welcome to no Show.
Mike McCormick:Thank you guys for having me looking forward to it.
Matt Brown:Let's start with something easy, simple, generic, Mike. What is the biggest existential issue confronting travel today?
Mike McCormick:Well, guys you know how to start with the softball question! I think it's the one we just faced. People love to travel. They love to travel because, you know, for a variety of reasons, you know it's, you know they love the connection with other human beings, they love to see, you know, new places. They love to, you know, have experiences right, other than the ones they have every day, you know, at home, right. First, terrorism years ago. Then the pandemic, I mean, showed what happens. Particularly the pandemic, when you were in forced isolation, you had the fear of restricted movement.
Mike McCormick:It really changed, I think, people permanently mindsets around travel and you saw that they called it revenge travel. I hated the term, but it was like everyone was wanting to get back out, they needed to go somewhere, like even people who probably didn't really travel a lot previously, necessarily, but just it was that it was like having something taken away, like the fact that you couldn't go, you couldn't experience it, you couldn't go someplace you always wanted to go. Look, a lot of people don't travel regularly. I mean, you know they, we certainly have, you know, now, at this point I don't know what the percentage is, but you know the people that have been on the airplane and traveled. Certainly it's 90 some percent or whatever the number is, but it's more the thoughts you can't like you were, you were restricted, something was taken away and I think it really it fundamentally changed people's view about it and it opened people up to the fact that, like how important that human connection is.
Jeff Borman:I saw a study last year to the revenge travel comment. I agree with you. I don't like the term but it really. You know it was almost redefining it as the redefined priority of travel. Once it was taken away people realized how important it was and so that kind of surged right back. But I saw a study at the end of last year only 11 percent of trips taken were for the purpose of making up right for that lost time. And I thought another interesting note there was on where that's happening. Demographically, boomers are driving us and I'm curious when you think of travel again, it's not a question about boomers or revenge specifically, but is there a certain demographic or a sector that matters most to the ongoing love of travel that your organization aims to create and see prosper? Does it matter that boomers probably got 10 years of good travel and damn, they're going to get it? What happens after that when you know why wants to you know Jen, why wants to see the world through a lens.
Mike McCormick:So, yeah, I think a lot of that is probably doesn't matter much. I mean, I think, ultimately, that we see the same things, right, it's all part of the life, everyone's life cycle, right? A lot of times, I think, people, organizations try to put labels on it and as if it's something new that we're discovering. The latest one was like oh, there's a new thing called surprise travel, that people show up and they don't know where they're going to go and they just want to go somewhere is new or different and they kind of make it up on the fly. It's like, well, people are doing that forever. I mean, there's, you know, the bucket shops in the UK. You know we're like, basically, you showed up the airport, what was on the chalkboard and you bought your ticket to go somewhere. This isn't new stuff. It's like what's old is new again. Sometimes we put new wrappers on it, we put new technology on it, we try to label a certain group or age or demographic and say, oh, but a lot of that is just more of the same, right?
Mike McCormick:I think the reality is ours, that we've been saying this forever, that the need to connect the human connection, whether it's for business, personal, that's why people love to travel. They love those experiences. Technology will never replace that. It can enhance it. It can stimulate maybe a desire to go places you never thought you'd ever want to go before, but it doesn't replace actually doing it. So I don't know. I think a lot of it is. You bring it back to basics, you bring it back to the fundamentals, and it's a lot of the same issues. The story slightly changed, right, but the fundamentals are the same.
Jeff Borman:I'm happy to hear the way you're describing this, because I see things like Apple's Vision Pro or Rabbit's AI-powered wearables and some of the marketing that it goes out to very young people today that this can replace travel. Why pay thousands in all the hassle of going all the way to Rome when you could just put this gadget on your face and be in the Coliseum? I'm glad you don't see it going that way.
Mike McCormick:I don't. I would say that over the years there have been many iterations of things that we're going to in quotes. Replace travel. I don't care how good the technology gets, I don't care. I mean, nothing replaces the human connection too. Right, that's a part of it. When you're out there and you're actually experiencing things for real, not just to you know hey, we all go to the movies I mean it's like great, but that doesn't replace me actually going to the destination. I mean I'm sure that, not just this iteration of the Apple Vision Pro, but when version 15 comes out, it'll be an amazing experience, but it still won't be the same as being there travel like baseball, feeds off of data and loves data.
Matt Brown:Is there a metric or certain statistic that your clients are looking at differently now versus, say, 10 years ago, 5 years ago? Or are there statistics that you encourage them to look at as like here's the real barometer of what's happening?
Mike McCormick:I don't think there's anyone set or. The commonality, though, is the fact that you really take the hard look at how you use data. That part of it has also become a big topic of conversation, right. So hotel community, you know just in that. You know some lawsuits have just come out about, you know, potentially allegedly misusing data, using it in a way to raise prices, right, and there have been suits that have filed in the hotel community, in the real estate community. They're pointing at the fact of ways that data there could be misuse of data On a positive way.
Mike McCormick:Let's take a look at, for example, like in the airline world, right, as we move to dynamic pricing and to, you know, the NDC, the standards that are being implemented and how that's all being basically rolled out in the industry. It's with the intention of using data and using information to create a better experience for the customer, tailoring the product and the offering more appropriately for them. And then, you know, for the airline in this case, you know giving them the ability, potentially, to increase yields, but because they're able to have, instead of having, you know, 26 fixed price points that they're leveraging, now you can create, like, basically smooth the curve and you can have thousands of price points and tailored and potentially, you know, in some, matching better, supply and demand better, matching pricing better and taking out a lot of those steps in the, in the, in the supply and demand curve, and allowing the you know everybody to effectively to win. If it's done properly, that gets really exciting. But again, only if you, if you're embracing it, you're leveraging the technology, you're, you know, you're investing in the areas you need to so that you can be a part of that process.
Mike McCormick:Right, and that, and that's not, it's not just the investment of the money, but it's also the you know the knowledge, capability and being smart about how you implement and there's a lot to that. So data is a big issue, both in terms of you know all the negatives protecting consumers, you know misuse where it comes to pricing yes, all those things. But it can also be again, a tremendous positive in terms of how we get used. You know again what offers to get curated, what it can mean for companies, their ability to connect with their customers better yeah, there's a lot of positives and upside to it.
Jeff Borman:So for the audience, that is not news junkies like we are. Mike, you're referring to STR and Marriott being sued in the announcement last week of a handful of people. By the way, this is a pretty small suit, but it's a good headline catcher. Yeah, it's saying that STR data was used in collusion with Marriott. I think Hilton was named as well. I'm not certain of that. My question to you, mike do you think that has any real merit? Do you think that suit goes anywhere, or is it just a good headline for somebody?
Mike McCormick:Well, it's gonna make some headlines. It's hard to say without knowing the details and what's really involved. But the example that was given was less to me about the parties involved, meaning the companies and their offerings, but it sounded like individuals leveraging or being able to use it in a way that was improper, right. So that's a big difference to me, like that to me, doesn't. I don't look at that and go well, that's a systemic Marriott like issue. It's like no, it sounded like it was something more than individuals were doing to basically game the system. That's a very different, you know.
Mike McCormick:And should there be protections against that oversight? Sure, but does that mean that you know you've got? These brands are all colluding on a massive? I'm just not buying that. Yeah, I mean, we all do. I work with these companies and these brands all the time. I find that really, really hard to believe. So I think there's certainly a there's a balance there, I think, between the things we're talking about. But again, it does point to the fact that you know there is a lot of risk out there and boy you know. And then back from a brand perspective, what are you doing? Things you're putting in place to try as best you can to protect against. You know even the smallest, you know the slightest misuse, because you know these headlines then become headlines, right, I mean.
Jeff Borman:Yeah, snowball, we're talking about it.
Mike McCormick:Yeah, well, exactly exactly.
Jeff Borman:You know I mean, as a guy who spent 20 plus years doing revenue management and waiting for the start to come out every week a major brand I don't see much merit in this. I've never personally seen anything that would bear witness to the claim right.
Matt Brown:I'm not saying that to defend anybody.
Jeff Borman:I just I'm with you guys. This is not a systemic problem. What I do hope is that you know Smith travel or STRs are not called. They haven't made any meaningful changes in the way they measure since the 90s. In some way, I hope this is a wake up call to them to shake them into modernity. I don't know if it can be, but that's my one true hope out of this.
Matt Brown:Shifting gears here. Our good friends over at American Airlines have been in the news a lot these days. I think one of the most recent stories was something about they're going to change how points are accrued, and I wanted to ask a little bit about what you think of the state of loyalty programs for airlines, for hotels, for everybody. Everyone has a loyalty program these days. Everybody wants one, everybody wants to improve the one that they have, but I feel like consumers are having a harder, harder time figuring out which loyalty programs actually work for them, and I feel like loyalty programs in general are either they're skewing to the polls, right, they're becoming either very high end, very, very nice, or they're at the other end where, wow, I'm not really sure what I'm getting for this other than surrendering my data to you under the illusion that I might get perks. Do you have clients who engage with you about loyalty programs and, if so, what do you tell them?
Mike McCormick:So how many hours do you have to talk, guys? Because there's a lot of you've packed into all that between loyalty and what Americans doing the industry.
Matt Brown:Let's start with loyalty first, and then we'll take care of American Airlines in a second.
Mike McCormick:So loyalty first. I would say, first off, look, I think it's a critical part, important part of the industry. It certainly drives customer-consumer behavior. It is basically a part of the ecosystem and certainly part of what continues to a piece of what continues to fuel and drive the travel industry in total, and so anything that's going to kind of, in fact, disrupt that is a concern and I think, one where, yes, I mean there are a plethora of programs out there, to your point, and part of the challenge for consumers trying to figure out where am I going to spend my money, spend my time, my focus, right, because to get the true benefits you have to consolidate some, your focus in earning and burning in a handful of places. You try to do all of them. You don't get any benefits of any of them. So there is a lot to it, and when the brands change their formulas and change their, the way you earn, or the change is the way you burn it creates disruption and confusion and yet more noise it comes down to, I think, always the brands have a to be successful, it's not just about having a program, but it's having a program that delivers some genuine value back to its members or users, but, again, I think, the future of the programs. I think they're around. They're around to stay for a long time.
Mike McCormick:You may have heard about there's a piece of legislation that got reintroduced again last year with an attempt to try to basically reform the way credit cards charge merchants, which, in effect, could wipe out loyalty programs. I think that is a real threat to our industry, and one that could again. Travel is fueled by points and earning, and it's all part of the formula. And one way, man, you want to put a real hurt on local economies and tourism and all that, boy, take away, take away loyalty programs, boy. That could. That'd be a quick way to find out how, find out how to undermine an industry that drives every other industry.
Jeff Borman:It's such an interesting perspective, one that I'm not sure which side of the fence I'm on here, because when I look at the loyalty program landscape, and mostly from a hotel perspective, from the business side, I look at it as a hotelier. From a traveler, I look at it to all the points I get on American Airlines. So the two wildly different approaches. When I look at these programs from the hotel side and the way banks are taking them over, I see it totally opposite. I see it as the threat to the current model of owner operator, and probably more than any other, and that's to me. I'm not the guest today right About existential threats what you just described loyalty programs existential threat to developing communities and places that rely on travel. I see it as the existential threat to can this business model survive if the loyalty program continues to gobble up all the profit?
Mike McCormick:But I also think there's competitive forces, will help to mitigate some of your concern. Are there extremes on either end that you could say, hey, there may be required some oversight? Yeah, maybe, but I don't think we're there yet. I think you just have to be very careful about tinkering with something that has been a big driver of travel, travel activity, travel spend.
Matt Brown:Circling back to the American Airlines news, just to clarify, one of the many things that's going on with them is that they announced that in May they're going to require travelers to book directly with the airline or their preferred travel agencies in order to get points in the loyalty program. What do you think is going on with American and do you think they're going to have the resolve to stick to this for a while?
Mike McCormick:Well, it's another one we could talk about for hours, and I certainly have. I think this is an interesting one. But stepping back from any of the airlines, the brands involved in any of this, if you step back and you say, ok, ndc was a standard that the airline set through AI-AUTA, that's more than 10 years old. So you can say, as an industry, the fact that there's going to be this new standard that's going to allow airlines and others to develop new technology, implement it, retrofit systems, which will lead to dynamic pricing some of the things we're just talking about that can create a new way that the airlines can be more effective, more efficient in trying to reach their customers better, understand them, sell to them, create offers, packaging, et cetera, and merchandise their product better. That's an objective that was laid out, a path that was laid out. So on one hand, you could say, well, this shouldn't be a surprise. I mean, everyone knew it was coming. So I'll take the pandemic years away and say, ok, that was a big press pause by everyone who was just working through and surviving, but none of this is a surprise. But yet American specifically took a decision, leadership decision, to say, like it or not, that, hey, we're put stake in the ground. This is when you have to initially implement here's what's coming. And they have a playbook. We don't all know what the playbook is, but they announce we're doing something at the end April of 2023. You have to be ready for it and these are the implications and this is what's going to happen. They did it again at the end of the year. They did it again now coming May. Right in terms of if you are a kind of an authorized, certified agency that sells our product the way we want you to sell the product, then you're going to get miles when your people's books and if you are selling the old way, then you're not going to get miles when you book our flights. Now it's pretty aggressive.
Mike McCormick:I likened it a bit. I was talking to a group and I said it's kind of like it uses a baseball analogy. It's when we talk about use of analytics and the money ball from the movie and all it's like well, I'm taking an analytical approach to it. This is what the numbers tell me. This is what I'm going to do. These are the dates I'm going to do it by.
Mike McCormick:They're taking a very 100% analytical approach to the industry. Here's what we're doing. Here's what we're doing by liken or not, our numbers, their internal analysis is clearly showing this is the pathway they should be on, and leadership clearly has a full belief there that these steps are going to take them to the place they want to go as a business in terms of how they sell their product. Whether that's the case, whether that'll play out or no, we don't know, because our industry is not 100% analytics. We're an industry that moves people. We're an industry that is about relationships, and it always has been. It's, yes, we're technology based and yes, but we're a highly complex, highly independent industry with a lot of links in the chain. You may not like it, but that is the reality of our industry.
Matt Brown:It's time for the mystery question, and this one's really good. Mike turns out Bill Gates is your long lost uncle and he's starting to chop up his estate and give it out to all of his extended family members. You are very fortunate. You received a billion dollars, but that money can only go to one of two purposes which he knows from his following you from afar for many years. He knows that these drive your passions. But you can only choose one of the two Option one to spend your billion dollars. You give that billion dollars to Notre Dame with the express caveat that your name goes up on the stadium. That means I-90, head to Chicago. Next exit Mike McCormick Stadium.
Mike McCormick:Right With my name, right under a touchdown. Jesus there, right, absolutely. Well let's talk to the church. Well, I'm trying to be respectful, I don't know.
Matt Brown:Okay, Sure, sure, let's say there'll be side by side. We'll work all that out later. Okay, that's option one. Option two you have unfettered access to be the prime owner in any Philadelphia sports team. You will be the owner of record, put up a billion, that's what you get. You get a box up there and you get to say I'm the guy, you go to the winter meetings, a whole thing, and you can choose any sport in Philadelphia, any major league team in Philadelphia. Which of those two would you choose?
Mike McCormick:It's pretty easy for me. I buy the Phillies in a heartbeat. I love baseball. I think it's such a great family sport still Going up to when Phillies have had some good years here, and I've been made up to some of the playoff games taking my kids and all, and it is still to this day. I mean I'm sitting there in this sold out stadium that's rocking, and right behind me is a mom with a baby with ear protection on and I'm just like come on, this is just it's a great sport and it's just a lot of fun. And no disrespect to my alma mater, but to be down at spring training right now or be just, it's like to me and owning a team like that or being a part of it, is like a public service. It's not. You don't own the team. The city owns the team, fans own the team, but you get the right of stewarding it and that would be an amazing experience to be great and being Philadelphia, this is heartwarming really.
Matt Brown:Both the mom and the baby would be screaming Expletives out at the performance of the players on the field.
Mike McCormick:No, that's not that's only the Eagles games.
Matt Brown:OK, so your next uncle, the next billion from the next uncle that'll go to Notre Dame. This one it is the Philadelphia Phillies would like to welcome its new owner. Wow, I can't wait. I can't wait for you to to confiscate tickets to this.
Mike McCormick:You'd be. You'd be in the box. Your invites are secure.
Matt Brown:Mike, this has been wonderful. Thank you so much for being our guest.
Mike McCormick:Thanks a lot, guys. It's been a lot of fun. Appreciate it. Mike, Thank you.