The Financial Impact of COVID-19 in Asia-Pacific
The April 29 IAAPA Asia-Pacific webinar “COVID-19 Recovery Plan” sparked discussion about what a post-coronavirus industry would look like and inspired a number of questions about the impact on finances and marketingfinancial and human resource level. IAAPA followed up on those questions with speakers Jeff Chatterton, Tony Sze, Kelven Tan, and Chris Yoshii for additional insight on the changes coming to our industry.
With the impact the pandemic has had on cash flow and income, how should we approach investing in all the medical resources we need to generate confidence among our guests?
Tony Sze, ICAE, Group Senior Counselor, Chimelong Group:
Investment in medical resources is a must in order to build up consumer confidence. Medical resources should not be just limited to face masks and body temperature checks. It should include proper medical seminars to the resort staff by health professionals and enhancement of standard operating procedures to ensure proper execution and compliance of local government legislations including mandatory face masks and safety distance. Our income and hence cash flow are getting limited due to the lock down, but the investment is a must in order to bring consumers back. We may have to cut corners somewhere else, but not on investment on medical resources.
Chris Yoshii, Vice President, Global Director of Leisure and Culture Services – Asia, AECOM Asia Co Ltd:
I don’t think these are massive capital investments. The remote sensing/ temperature screening cameras, etc. are quite standard these days and many parks already do security screening. These systems will be a basic requirement for doing business of any place where people gather.
There are more operational requirements in terms of increased cleaning staff and cleaning supplies. For example, ride vehicles will need to be wiped down at regular intervals. This will reduce capacity and increase staffing. The safety of staff is very important. Face masks and gloves are now becoming more widely available and prices are coming down. Regular testing of staff maybe necessary.
Kelven Tan, Vice President, Business Development for Asia, Dynamic Attractions:
I envisage possibly just one major area to add: walk-through body spray systems and temperature checks. These are not unlike those used in clean rooms in factories. Another method could be covered areas for UV light treatment for ride vehicles before the next load. However, these might take some time to modify or add too, and will also decrease the theoretical hourly ride capacity (THRC) for rides as they have to take into account the additional minute for the UV light to take effect. However, these are some ideas being worked on by some.
Education, as Tony stressed, is critical. In the early days of the AIDS epidemic, people shied away from hugging or touching a patient. Now it is clearly known that touching, hugging, and sharing of food with HIV-positive persons will not pose a threat to safety. Likewise, as mentioned in the webinar, the medical baseline is important so that education efforts can be built from that baseline.
How long do you estimate recovery from the impact of COVID-19 will take?
This is a very difficult to estimate. In theory, the COVID-19 outbreak is under control in China, Hong Kong SAR, and Macao. However, the traveling restrictions are still enforced. Also, our business very much counts on the overall economic performance. For full recovery, it will take another six to nine months, or may be more.
How should we change how we do business at our theme parks? Is it better to use technology or continue to rely on humans—what is more cost efficient over time?
There is an old saying in China: “Whenever there is crisis, there is opportunity.” Yes, this is the right time to take a good look at new technology to improve control of the virus outbreak and consumer confidence. For example, auto thermometer body temperature check and auto tracking of close contacts in case of outbreak.
I think guest services, operators, and entertainment will still have a strong human element. Some of this can be delivered through media rather than face to face, but there will always be a human element. Nonetheless, it makes sense to review all aspects of operations to see how to reduce human contact and potential contamination.
We are in the people business. That is the crux and essence of what we do. Humans are social animals and the human element will not be absent for long.
Concerning price elasticity of theme park tickets, have any studies been conducted into the success of sales strategies and long-term negative effects (i.e. brand damage)?
We use pricing policies all the time in our resorts. Consumer behaviors in China are sensitive to price elasticity. But we are not operating at 100% at this time. We have partially reopened since April 30. We realized the consumption power on leisure products such as theme parks and hotels are adversely affected. At the current moment, price reduction does not promote sales that much.
Theme parks have extensive programs for discounts, promotions, and add-on features. So while the headline price can remain the same (and should remain the same), there could be some temporary promotions. Not everything has to be reduced prices—some promotions can add features (free meals, free drinks, free photos, free merchandise,) which can add value to the package at a relatively modest cost. There may be fewer attractions open so offering an added feature will balance the value.
Many might feel that price discounts are the way to go. I would differ on this point. Rather, research from the festivals and events industry showed some 42% are willing to pay the same or more for tickets if safety measures are put in place. They are willing to pay more to ensure that and to have a good time in a safe way. I believe these desires will be transferred in the same way in our amusement industry. In the usual one price entry system, value add items as mentioned by Chris are good ways. And if abundant availability of hand sanitizers, touchless taps, automatic gates/ doors, and other aspects are added, and even free masks, this will help increase guest confidence and thus, price elasticity should not be an issue
Does Jeff have any recommendations for building a sense of empathy ahead of re-opening? Beyond creating a sense of "we,” how do we build confidence on social platforms so that our guests have confidence in our ability to keep them safe within the new context of our operations?
Jeff Chatterton, President, Checkmate Public Affairs:
If you're considering reopening, your guests are going to concede that you're likely safe. You've got the nuts and bolts down—lots of hand sanitizer, wiping down machines, social distancing, etc. But what are the tough questions that vocal members of the community are asking?
Remember—you may not like the tone. The questions may be downright hostile or angry... but they're still legitimate questions. Questions like: how dare you consider reopening, is your wallet more important than the safety of our community, why haven't you rehired all your old staff, can you guarantee the safety of your visitors, how can you consider opening when people are still being hospitalized? These are all tough, mean questions—but they're also really legitimate questions. If you're calmly, carefully, compassionately answering all those really tough questions before the questioners have a chance to even ask them, that clearly shows empathy and leadership.
Do yourself a favor—get your meanest, harshest team member to compile a list of really hardball questions and start working on answers ... and then start incorporating those answers into your social media posts and frontline customer service training. If you're not answering those questions, people will feel the need to ask those questions, and now your 17-year old who answers your phones is thrust into being your primary spokesperson. That's not good for the 17-year old, but, more importantly, it's not good for you either.
Jeff mentioned that we tend to focus our public relations efforts on the “Supporters” and the “Splentics,” but what we really should be focusing on are the “Sympathizers” and the “Skeptics.” What about the one in the middle, the “Straddlers?” It seems that that middle has the greatest potential to sway over to your side.
Here's how an average audience will break down: 1% will adore you—I call them "Supporters." 4% will like you a lot, but if you do something stupid, they're going to call you out on it publicly. I call them "Sympathizers." 90% of the audience barely knows you exist. They are vaguely aware of an attraction and may have gone a few years ago. These are "Straddlers." 4% don't like you and will yell, scream, and shout, either in social media or in person. These are "Skeptics." 1% loathe you. They hate you and will never say anything nice. These are "Splenetics." Smart communication means communicating almost exclusively to the skeptics. Skeptics ask tough questions, but they're legitimate questions.
Traditional marketing relies on communicating to Straddlers, for two reasons: A. That's where most of the people are, and B. therefore, a marketing agency can charge you the most money. Right now, those Straddlers are wondering if they have a job. They're running around, homeschooling their kids, trying to figure out how to get groceries, and caring for elderly parents. Do not waste money trying to reach "Straddlers." They do not care. They barely know you exist. Eventually, they will get around to wanting to experience an escape and a fun diversion from the fresh hell that is their everyday life right now. When they wake up, they're going to see two groups of people talking: Splenetics and you, who is calmly, carefully, and compassionately answering all those really tough questions with empathy. So focus all your energy and focus on the skeptics. You'll pick up the Straddlers along the way, but don't try to compete in a crowded marketplace, promoting a message they really just don't care about right now.
(Questions and answers have been edited and condensed for clarity.)