How the tour and activities industry can futureproof their business following a rollercoaster ride
It’s not often you see an industry that’s been around for decades and carved a place for itself, come of age. In the last three years or so, tours and activities is one such industry that has moved up the ladder and is now recognised as a major player in the travel business. A player worth an estimated $180 billion annually, and as such, travel retailers and investors have shown a great deal of interest in this sector.
Then along came Covid.
Following a horrendous year, the travel industry is now feeling the very early signs of recovery, but as tourism starts to grow it will need to adjust to a world where everything we do, including all activities, will change. As travellers start to explore the world again, the desire to book tours, theme parks and trips will feature in their plans, however the likelihood is that they won’t be experienced in quite the same way as before. Heading into the new year and beyond, tour providers will need to make changes to futureproof their business and in order to do so they will need to focus on three key areas - product offering, pricing and sales channels.
Many regional businesses compare prices with local competition. Two operators offering similar boat trips are likely to price their product at the same or possibly slightly lower level. But tours are about experiences and there are many opportunities to make your tour stand out at little or no extra cost – add a lunch or refreshment to the trip or a bit of theatre into the commentary and you have made a difference.
As tours and activities reopen for business, many will need to be managed in a very different way from what they have known before. Crowds are expected to be much smaller — and more controlled. In a coronavirus era, tours will be Covid-friendly, with smaller or private groups enjoying experiences in the open air. Theme parks may include mandatory temperature checks; visitors and guides in masks and seats spaced to allow for social distancing. Whether families, students, more mature or retired, know your market. Create products that these groups value and make the changes necessary to ensure trust and safety.
In recent years tour operators have penetrated the OTA industry, but while this has been a leap forward for many, they need to be cautious. Every business should understand its costs and profit margins, debts and so on. Selling product requires an understanding of the market, and tour operators are no different. However, they may struggle to market their product(s) to what could be a very diverse and disparate market. Distribution costs, fixed and variable costs and post-pandemic smaller group sizes are just a few areas that need to be factored into the cost of a tour, especially for operators that sell through third parties and not through direct sales channels.
According to a report last year by Arival, the percentage of bookings made online still sits below 30% but continues to grow at a rapid rate. Walk ups will no longer work, and as people plan ahead and research the safety of tours, more sales channels will go digital.
New solutions are available, enabling tour providers to manage their inventory and sell directly online or through third parties - including OTAs. They connect activity providers with travellers who have become accustomed to planning and securing their travel needs online. Some of the more advanced systems, such as our own reservation system TripAdmit Thrive, also enable operators to administer seasonal pricing variables.
Systems like these are designed to enhance online sales and distribution capabilities and are helping tour operators reach markets on a global scale. Great news for this multi-billion dollar industry whose shift to online is reminiscent of the early days of online hotel and airline booking.
The tours industry is fragmented, with the majority of businesses run by small teams of 2 to 10 people. These businesses are longing for travel to return to a sense of normality, as we all are, but in many ways, they are better equipped to deal with this crisis. With little monthly costs, many can sit tight and wait for the recovery to start. As most predict that this will be driven in the order of local, regional and international travel, tours and activities are best placed for each stage of the recovery.
Those businesses that are digitally focused, are adaptable and offer outstanding and safe experiences will succeed and secure their future when this crisis comes to an end. The operators that are also strategic in their product pricing will be the ones making a very healthy profit on top.