Travelers are becoming smarter, so is the need for tour operators to be. The history itself defines the growth of tours and travel business as it’s easier now than ever before to book trips online with more choice and more booking platforms.
With the emergence and increased fame-light of some industry giants like Tauck and Journeys Within, some small and equally effective travel companies which are specialized in providing personalized services and a unique customer experience are left down dull.
At TripCenter, we have researched the changing travel trends and listed out the lessons learnt by tour operators in 2018 regardless of their strength, size, and scope.
1) Market dominance
Some of the industry behemoths have a stronghold on the industry and its market. Just their great brand identity itself is enough to pull in a vast number of customers, which sucks the life out of smaller competitors and agencies, whether established or only just getting started.
Staying competitive in the market requires continuous creativity and innovative ways to attract new customers. These superpowers have deep pockets that are backed by either VC funding and/or shareholder funds. They are heading the race by spending billions of dollars on customer acquisition and offering deep discounts, which are the main reasons why small tour operators have no room for development. For them, a customer is a source of data, a dot that connects with many aggressive sales campaigns.
There is a 35% reduction in the growth rate of small tour operators. The factor responsible for this is, small-scale travel companies have a great number of competitors at their level who are ready to take away the customer in just a fling of time. This provides potential travelers with more choice than ever before, as there is certainly no shortage of options when it comes to researching and arranging trips, which is, of course, good for customers. These tactics are under control as now the operators have started to understand the market and have started their product offering to a specific niche by pivoting.
2) Credibility & trust
No matter what field one is in, it is very important to develop a level of trust and confidence with target customers. According to research done by Forbes, trust is a critical success factor in today’s business era. But with great competition around in the travel business, where everyone is bombarded with the so-called “best in class services” from most operators, it’s hard for a newbie to maintain its existence.
There is a higher probability to make a mistake when the tour operator is not properly linked to its customers about their needs. Due to this and lack of destination knowledge, customers are underserved and there are chances that the tour operator might lose its credibility as its customer is left underwhelmed and unhappy with the services. Credibility can also be lost if tour operators take too long to manually customize a trip to generate a quote, as everyone is looking for instant results and will start searching for other options in the market.
3) Emergence of sharing economy
The new wave of share your ride and home has impacted many tours and travel businesses and left them in the lurch. Travel operators are left pondering around in the market about how they can tap into a trend that is wittingly leaving them out of the equation.
Offering personalized and enhanced travel services to the customer is a niche market for tour operators, whereas the companies with these sharing policies use their certain market strategies and provide their customers with some tempting offers and break the market value of associate tour operators.
4) Communication and brand awareness
The most important factor that acts as a drawback for tour operators is that most of them are lesser known. It’s very important to get noticed in the world full of competition. Looking at the branding of the large players of the industry like Adventure Unbound and TCS World Travel, it gives a deep insight into how they have to build a huge brand presence by digitizing their brand idea.
These travel companies are making a deep investment in promoting their brand through a variety of channels like; social media platforms, email marketing, brand website, brand application and are gaining a great ROI by luring in customers while increasing brand preference and loyalty.
The small tour operators are laid back in the area of awareness, which in return impacts their business as they do not have that brand identity which could lend them a good amount of leads and profit. The main reason behind this is their low or negligible budgets and a lack of technical knowledge. Most of the tour operators don’t have enough money to invest in their branding, neither are they technically sound to understand the power of media, which is the need of the time to grow their brand and in return grow their business.
To remain in the business, it’s very important to know your target audience well, so is the need for constant communication with them arises. In this age where people aim for 24/7 assistance from any of their opting company, there is a huge communication gap between tour operators and their potential customer, as these operators lack the user-engagement and just focus on the services they provide.
To break down the barrier of communication, there is no better option than to use the power of social media. Social media is a great tool to develop brand identity and a channel through which a company could easily engage with its audience. This in return can create a profound effect on people’s behavior and how they start recognizing a company.
5) Working with multiple layers
Just to start the travel business requires different government approvals and various bonds with significant upfront holding deposits. Tour operators face ongoing challenges at every step of their business growth. As part of a travel operators responsibility, they need to create a package, book and sign contracts by putting together various components of the tour such as hotels, transportation, meals, guides, optional tours and sometimes flights. During this process, a tour operator needs to cross over various confirmation processes which are time-consuming and often multilayered. These factors act as the main reason for the delay in providing quotations to customers.
The other and the most important challenge for travel companies is how they distribute products through multiple online and offline sales channels while managing inventory. This can only be resolved by vast experience, deep and proper understanding of the business as well as customer needs.
Shifting business dynamics are changing the role of tour and travel operators and also the challenges faced by them. Technology has empowered each and every sector and travel companies are the first ones to be impacted by any technological advancements. In an effort to make it easy for tour operators, the trend of sharing API has started. With the help of developers, one can take a cue from the existing one, and add their own unique features to build an elaborate booking system of their own.
Technology has also made it easy to book with local ground transport operators directly who provide global ground transfers. By creating a huge virtual network of tour operators online, it gives an opportunity for smaller operators to create an online presence and expand their business by getting global exposure.
Even though tour operators have been faced with many challenges and lessons to be learnt in the year 2018 along with the development of travel tech, not all of the industry has taken it into consideration. It would be interesting to know what new tech-hacks year 2019 will come up with to flourish the tour operators’ business by multiple of 10.