This article was originally created for Hayes Knight (now Nexia Auckland).
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We are delighted to bring you an inspiring article written by our client, iFLY Indoor Skydiving, who shares their personal insight on how they have used the challenges presented by Covid 19 to ‘pivot’ their business – maximising opportunities and minimising detrimental impacts on cashflow and other aspects that are critical to the survival of startups. They have certainly learnt a lot through this experience! Read about their journey so far…
iFLY Indoor Skydiving is a global tourism business that launched its first New Zealand operation in Queenstown in late 2018. Entering its second full financial year, iFLY Queenstown experienced immediate revenue declines in January 2020, which progressively worsened as the effects of Covid19 took hold on international travelers.
Tourism was the first hit by the global pandemic and will likely be the last to recover. Pre-Covid19, iFLY Queenstown was heavily reliant on international visitors and faced a daunting 80% decline in customers. Without much notice to plan a survival strategy, a natural reaction would be one of fight or flight.
In our case, we took the decision to get to work and reinvent our business, “pivoting” to a 100% domestic model; because without legacy trade, or large coffers to sustain the business through extended hibernation, this was the obvious solution. Hayes Knight assisted with financial projections, scenarios and cash flow forecasts that were vital to planning our next moves. The ongoing conversations and guidance from Hayes Knight allowed us to act decisively; controlling the controllable, influencing what we could, accepting what we couldn’t, and executing a survival plan to navigate an uncertain future.
A recent startup, iFLY Queenstown is lean, entrepreneurial, and hungry. Heading into 2020 the team were high-performing, resilient, commercially savvy, used to failure; constantly testing and validating. This startup mentality placed us in a strong position to weather the financial storm to come.
During Alert Level 4 tourism businesses were scrambling, cutting all advertising spend and abandoning sales and marketing activities. Advertising platforms that were normally expensive reacted by slashing prices. A cluttered and noisy advertising space was, for the first time, deathly silent. Being small, nimble, and operating autonomously, allowed iFLY Queenstown to steady the ship and form strategies much quicker than our competitors. Larger tourism operators were hemorrhaging overheads with no revenue. Amongst the chaos and uncertainty was a clear runway for iFLY Queenstown to execute a focused marketing strategy.
Months of prior market testing allowed us to quickly launch pre-determined domestic offerings for the price-conscious kiwi audience. This initial activity further drove our marketing direction. We actively sought media/PR opportunities and boosted our marketing efforts. National TV, radio, newspapers and online media were keen for any ‘good news’ stories and we were picked up by these and given much-needed exposure.
With no active competitors, we had a small window of opportunity to be bold with advertising and our yield management, to chase volume. By launching “Our Biggest Sale Ever” campaign with 50% discount and gift vouchers valid for 12 months, we created cashflow during Level 4 lockdown.
Level 2 allowed us to operate with restrictions. Air NZ recommenced domestic flights, triggering a digital strategy shift from awareness to conversion, targeting key demographics in Auckland, Wellington and Christchurch (the new Air NZ routes). This saw a significant increase in web sales as pent-up consumer demand grew with confidence.
Level 1 became the norm and iFLY Queenstown was one of few Queenstown operators open at full capacity. While many businesses were struggling to open, there was an opportunity to capture the new domestic audience. The more recent July School Holidays produced record customer numbers and revenue days to fill the buckets. Surprisingly the domestic market outperformed the international market we’d lost, doubling our prior year’s customer numbers over the same period.
Covid19 has reinvented the traditional iFLY revenue models. Our approach to yield management has improved pre-Covid19 revenue performance through better uptake of add-ons, while significantly increasing our customer volume vs the previous year.
We have been challenged with finding applications for a large vertical wind tunnel generating 250km/hr of wind that would generate new revenue opportunities in the domestic market. We are pleased to report that we have found numerous opportunities. Unlike international tourism, domestic tourism is a weekend market, leaving our weekday trade empty.
Our wind tunnel simulates a skydive freefall and naturally attracts pro skydivers able to train safely, efficiently and more cost-effectively than traditional skydiving. Like any sport, it takes hours of hard work to master and is addictive. We have also further enhanced our revenue capabilities on weekdays by extending the Proflyer to the military as an application for training purposes.
We launched a S.T.E.M, Tourism and Business education programme and it immediately gained interest from secondary and tertiary educators in engineering, physics, tourism, geography and commerce. Many of these groups would head overseas for educational adventures tailored to each class, but with borders closed, they are now engaging with our programme. The programme is more relevant post Covid19; offering safety, assurance, accessibility and is more economical than travelling abroad.
Our large indoor venue lends itself to larger group activities, increasing our corporate conference, incentive, events and team building business. Our group offering is fun, engaging, confidence-building and operates in all weathers until late at night.
Locally, we launched ‘Flight School’ to introduce local and regional first-timers to the sport of Body Flight…it’s like ‘after school sports on steroids’.
Hayes Knight and other business advisors have made a seemingly helpless situation manageable, giving iFLY Queenstown confidence to navigate the short to medium term. International tourism will return and the NZ tourism industry will again be the strong economic pillar it once was. Covid19 has presented the opportunity to reinvent our business, making it more sustainable, efficient and valued by kiwis. The domestic shift has been challenging but rewarding and iFLY Queenstown’s goals have moved from surviving to thriving.
Matt Wong General Manager iFLY Indoor Skydiving NZ LTD