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The Ultimate Guide to working with Tour Wholesalers and Operators

By: Marium Farooq

March 3, 2023

Table of Contents

Tips and Tricks to establish partnerships with Tour Wholesalers and Intermediaries

As you grow your business and find ways to optimize your revenue, you will be intrigued to work with Tour Wholesalers and Operators. But it can be challenging to understand the pros and cons of working with them to ensure the relationship affects your business positively.

Here is everything you need to know about working with Tour Wholesalers and how to make the most of this amazing opportunity:

What is the difference between a Tour Operator and a Tour Wholesaler?

The terms are often used interchangeably but have different meanings. A Tour Wholesaler creates packages by combining multiple activities, most likely, transportation and other services, and sells them via a sales channel. A Tour Operator is an organization or a firm that combines components from different travel suppliers and sells directly to the public.

Why are tour operators and wholesalers important?

Tour Operators and Wholesalers can help you sell bookings in bulk which can help you grow and increase your profit. A sizeable segment of travellers are searching for all inclusive travel packages with the ease of booking. By building a relationship with tour wholesalers and operators, you can add an additional revenue stream to your business. It can also be a valuable distribution channel to scale your business and ensure that travellers have access to your activities and services.

What are the 3 main types of tour operators?

The three main categories of tour operators are Domestic Tour Operators, Inbound Tour Operators, and Outbound Tour Operators.

Domestic Tour Operators create inclusive tour packages specifically for domestic travellers. To simplify things, they are tour operators who provide travel packages within the traveler’s native country. They typically combine multiple tourism components to create packages e.g. a transport service and a set of activities to sell to travellers within the country boundaries. Domestic tour operators form relationships with other travel service and activity providers to create unique experiences for travellers in order to attain a larger share of the Domestic Tourism market.
Inbound Tour Operators or Incoming Tour Operators handle all activities and arrangements for the tourists in the host country. The packages are created specifically for Groups and Individuals who are non-residents of the country traveling to the host country for leisure or business. An inbound tour operator typically works with local travel agents and businesses to curate a tour package or packages that covers their own country.
An Outbound Tour Operator or Outgoing Tour Operator handles all travel arrangements and activities for International destinations. To simplify it further, the packages are created to take travellers to other International Destinations from their home country. They are tour operators who market their tours for international destinations, either for business or leisure travel. Typically, an outbound travel operator will work or partner with businesses, destination marketing organizations and online travel agencies in the destination country to design a tour package for their customers. Most Outbound tour operators specialize in particular destinations based on tourism trends, their distribution partners and their expertise in the destination country.

Tips for working with Wholesalers and Tour Operators:

Here are all the secret ingredients you need to form successful travel partnerships with Tour Wholesalers and Operators:

Research to Find the Right Fit

Every Travel Wholesaler and Operator is different. They have their unique distribution systems and they cater to different markets. You want to make sure that there is a connection between their offerings and yours, especially in terms of the market they are targeting and the tourism services they offer.

Start off by conducting research and compiling a kit consisting of their product fact sheets, pricing information, distribution channels, terms and conditions and any unique information that you might require to set you off on the right foot. This information is instrumental in creating a long-term mutually beneficial partnership with Tour Wholesalers and Operators.

Sell Unique Activities and Experiences

One of the most important pieces of the puzzle is to make your activities attractive for the Wholesalers and Operators. It is most likely that you will be working with multiple tour operators and wholesalers, and you want to make sure they find your offerings attractive and unique to add to their itineraries.

Having authentic and unique experiences will not only increase the demand for your activities and bookings but will also appeal to Travel Operators to promote it better, more so than your competitors. According to recent research , the demand for unique experiences is on the rise and travellers all around the world are willing to pay a premium price for unique experiences. Adding an extra element to your offering to make it stand out might go a long way for your business to generate more revenue by putting you in a position to negotiate higher prices with the tour wholesalers and operators.

Prepare to Manage Bookings in Advance and in Real-Time

Managing Bookings while working with Tour Wholesalers and Operators can be a huge challenge. First and foremost, an Online Booking Software is essential to attract Tour Operators to work with you. It will simplify the booking process and will help your partners automatically earn their commissions. It will take away the mundane tasks of constantly emailing and calling to manage bookings and will replace it with a system that updates in real-time and makes everything effortless.

Working with wholesalers and operators can put you in unique situations which will go beyond simple bookings and commissions. One of these cases is to create bookings in advance and then manage real-time bookings as they happen with time. There are many factors that might come into play, which is why you should invest in an online booking engine that can help you customize your Online Booking System and make it a seamless experience for yourself and other stakeholders.

For instance, a software like Zaui with 20 years of experience can help you connect with the best partners all around the world, allowing them to book instantly with zero human interaction. You will ultimately save time and make more money.

Build Personalized Partnerships and Track Performance

What works in one country might not work in the other, the same is the case with Wholesalers and Operators since they can be located in different parts of the world and operate in different types of travel communities. Building personalized partnerships will help optimize your bookings and create custom marketing strategies to make better-informed decisions.

It is equally important to keep track of how each partnership is performing for your business. Tracking the performance will determine the next steps for your Marketing Plan and Communication. Additionally, it will provide insight into each market and ultimately boost bookings.

One of the ways to achieve your goals and maximize your performance is to choose an Online Booking Software that can help you connect with the best distribution agents all around the world and track their performance.

Zaui Online Booking Software offers a Channel Manager platform and Reporting Dashboard that can help you connect with distribution partners and optimize growth. Request a Free Personalized Demo from our support team to help maximize your Bookings and Revenue!

You can also have a look at our website to hear our customer success stories or check our Buyer’s Guide as you search for the best online platform to work with Travel Wholesalers and Operators.

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Working with tour wholesalers: 9 tips for tour operators

By Rezdy — 7 Feb 2019

agent bookings distribution tour operator wholesaler

Updated April 2023 – Expanding your distribution network and improving your online distribution strategy can greatly benefit both outbound and inbound tour operators , but it’s key to remember that success in the travel industry is not solely based on the quality of your product. Partnering with travel wholesalers can provide a valuable channel for reaching a wider audience and increasing bookings, but it’s important to strike the right balance between working with wholesalers and maintaining your own tourism profit margins .

These tips will help you develop relationships with the top businesses in the wholesale travel industry.

What is a tour wholesaler?

If you want to target wholesalers as a distribution partner, then you need to know exactly what they do within the travel industry.

The role of the wholesaler is unique, in the sense that they don’t work directly with travelers in the marketplace. Rather, a wholesaler will sell your tour products to retail travel agencies. In addition, they work with inbound tour operators to manage the specific details of itineraries. Essentially, B2B travel wholesalers help create all-inclusive packages for travelers to book. More and more travelers are now searching for comprehensive travel packages that include all of their experiences. By engaging with tour operators and travel wholesalers, it will be a valuable distribution channel for you to focus on.

9 tips for tour operators working with wholesalers

Here are nine tips for successfully working with B2B travel wholesalers.

Learn how tour wholesalers work

Learning how tour wholesalers work is crucial for tour operators who want to effectively partner with them and grow their business. Wholesalers act as intermediaries between tour operators and travel agents, and they often have established relationships with a wide network of agents who can help promote and sell the tours. By understanding how wholesalers operate, tour operators can better navigate the process of negotiating commission with travel agents and setting competitive pricing for their tours.

Additionally, understanding how much travel agents make can help tour operators tailor their offerings to meet the needs and expectations of their target audience, ultimately leading to increased sales and a more profitable business.

Highlight the unique selling point of your tours

Wholesale tour operators are frequently searching for tours and activities that are both unique and authentic. These are the types of experiences that travelers are craving, and they want to be able to customize the itineraries. Not only that but having unique experiences will also be appealing to retail travel agents to better market the activity. According to Arival’s Path to Purchase September 2021 edition, the demand for unique experiences in 2021 has increased at drastic levels. More travelers are now searching for an experience that stands out and they’re willing to spend more for it.

When working with travel wholesalers, use online marketing techniques to showcase your products. Be sure to emphasize any value-added features that you include with the booking rate. Building unique experiences can be as simple as adding extra elements that your competitors might not do. For example, Offering lunch or dinner options along with a tour maybe that extra bit that will seal the deal.

Streamline your bookings online

Given the nature of their job, wholesalers will almost exclusively work with tour and activity operators who offer online booking. They are not going to have the time available to make phone calls or wait for e-mail responses. To attract the best wholesalers in the wholesale travel industry, you should implement an online booking system that simplifies the booking process. In addition, your online booking system should allow them to automatically earn their commission. This is, understandably, a priority of wholesalers.

For instance, an online booking software like Rezdy allows you to integrate and connect with multiple distribution agents. Once connected, they’ll be able to see live rates and real-time availability that allows them to book instantly. This removes the need to get in touch with you in order to process the booking. Once a booking has been processed, the commission rate you set will be automatically distributed to the agent.

With a system like Rezdy in place, it’ll help both you and the wholesaler save time spent on processing orders. As a result, it will allow you to allocate your resources to more important areas of your business.

Set consistent rates for your tours

It’s imperative that you set consistent rates for your tours and activities, regardless of who is selling or booking them. For example, you can’t charge OTAs (online travel agents) one rate for your tours while switching up the prices on your website. When working with wholesalers, it is important to note that the commission rate may vary from one wholesaler to another. This may impact your profit margins, but it is beneficial to work with a diverse range of distribution agents.

Approach each tour wholesaler individually

Each wholesaler is different and the services they provide may vary from one wholesaler to another. As a tour operator, you’ll be working with multiple wholesalers located in different countries and regions that provide different services to different types of travel communities.

It’s important that you treat each wholesaler individually and build a personalized partnership. By doing so, it will help maximize your bookings and give you ideas for future marketing strategies. Consider incorporating a cloud based phone system into your operations to enhance your collaboration during the initial stages of your partnership. With this system, you can easily communicate and coordinate no matter where these wholesalers may be located. Features like call forwarding, voicemail, and conference calling enable seamless communication allowing for quick responses and effective coordination.

Meet your tour wholesaler face to face

Building a strong relationship with your tour wholesalers is crucial in ensuring you continue to have a smooth ongoing partnership. Being able to build trust and likeability with them allows for a more personalized venture that benefits both parties.

To communicate with your wholesaler via email gets the job done, however meeting them in person or over video -call will add that personal element. You will see that communication and negotiations will flow much easier once you have met them face-to-face.

Connect with your tour wholesaler on social media

Social media is currently one of the strongest platforms many businesses use to communicate with their customers and followers. In this day and age, many businesses – big or small – have a social media page that they will use to promote their business or provide updates.

You can use social media to your advantage by engaging with your tour wholesalers on multiple platforms. When you’re able to show support and promote your partners on social media by following, sharing, and engaging with them, they will likely return the favor.

When other businesses promote you on their social media page, this will open you up to a pool of viewers that may not be aware of your business. Consider it as free publicity.

Treat your tour wholesalers like your business

When you apply to partner up with a travel wholesaler, it’s best to do some research about the company and approach them personally. Partnering with a travel wholesaler is more than just signing up to become one of their suppliers, you need to treat them as if they’re your own business. After all, they are providing you with another stream of income.

When working with a travel wholesaler, make sure you inform them of the latest updates, promotions, and opportunities. This will ensure that their staff is up to speed on the latest information that they then can share with their customers.

Keep track of your bookings

It’s important to be able to measure the success of the partnership between your business and the travel wholesaler. After all, you want to know what’s working and what’s not in order to cater to and strategize for the best possible outcomes.

Keeping track of the bookings that come through from each distribution agent will allow you to have a better understanding of each market. This can then help you create marketing strategies catered towards these markets in order to boost your bookings.

Key takeaways

Working with travel wholesalers can be a valuable strategy for tour operators looking to grow their business and reach a wider audience. By understanding how wholesaler tour operators work, negotiating fair commission rates, and developing strong relationships with their partners, tour operators can successfully navigate the complex landscape of the travel industry and maximize their profitability.

One effective tool for achieving just that is an online booking software like Rezdy, which streamlines the process of partnering with distribution agents, including wholesalers. Rezdy’s innovative channel manager platform ensures that all partners have access to your live rates and availability, making it easier to manage your distribution network and maximize your profitability.

If you’re interested in trying Rezdy for yourself, you can sign up for a FREE 21-day trial or request a free demo from our friendly team.

If you enjoyed this article, be sure to subscribe to the Rezdy newsletter , where you’ll receive up-to-date learnings and news from the experiences industry straight into your inbox.

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What is the difference between a tour operator and a tour wholesaler?

Often used interchangeably, the terms tour operator and tour wholesaler are different. The operator sells packages directly to the public while the wholesaler sells the package through a retail travel agent. Over 90 per cent of tours sold by independent wholesalers involves air travel.

There is no definitive answer to this question as it depends on a number of factors, such as the country you are operating in, the type of tour you are offering, and the level of risk involved. However, as a general rule, it is always best to err on the side of caution and take out insurance to protect yourself and your business.

Travel businesses can include travel agent's and/or tour operator's liability insurance, scheduled airline failure insurance, travel bonds, public liability and employer's liability insurance.

How can I become a travel agent for free?

If you are interested in becoming an agent, you can easily obtain your travel agent certification online for free. There are numerous free online courses that can equip you with all the necessary information to work as a travel agent. These include Coursera, which offers 100% free online travel & tourism courses. How do you write a powerful tour proposal? Plan out the details of your trip. Include the dates of travel, locations you plan to visit, approximate length of stay and any specific goals you have for the trip. List all the materials you're going to need. Create a budget. Research potential funding sources. Write your proposal. Review the proposal and send.

What is a specialist tour operator?

A specialist tour operator is a tour operator that provides niche or specialist products and services. Specialist tour operators typically have a deep understanding of their chosen niche or specialty, and they use this knowledge to design unique travel experiences that meet the needs and interests of their clients. Specialist tour operators often work with small, local suppliers in order to provide their clients with authentic experiences that cannot be found anywhere else. What are the four types of tour operator? The four types of tour operator are wholesale tour operators, retail tour operators, inbound tour operators, and outbound tour operators. Wholesale tour operators buy travel products from suppliers at wholesale prices and then resell them to retail tour operators. Retail tour operators then sell these travel products to consumers. Inbound tour operators specialize in handling incoming tourists from other countries and organising their travel itineraries within the host country. Outbound tour operators, on the other hand, focus on organising travel itineraries for residents of the host country who want to travel abroad.

There are five types of tour guide: 1.Theme park tour guide 2.Museum tour guide 3.Historical tour guide 4.Nature tour guide 5.Art tour guide

How much does a tour guide make? The average salary for a Tour Guide is?12 in Ireland. Tour Guide salaries can be found in your area. 13 salaries were submitted to Glassdoor by Tour Guide employees.

Accordingly, what is tour wholesaler?

A tour wholesaler is a company that provides tours and travel-related services to tour operators and travel agents. They typically offer a wide variety of tours and travel services that can be customized to meet the needs of their clients. Tour wholesalers typically have a network of relationships with tour operators and travel agents around the world which allows them to offer competitive pricing and terms. What is tourism package? A tourism package is a trip that is pre-planned and sold by a travel company. It includes transportation, accommodation, and activities in a particular destination.

By Adelheid Rehbein

How Multi-Day Tour Operators Can Succeed in Wholesaling Their Tours

Are you a multi-day tour operator that has ever considered the possibility of wholesaling your tours for another tour company?

Perhaps you have just been approached by an outbound tour operator, and don’t know what to do.

Well, this is the post for you. Keep reading.

What is a DMC? What is White Labelling? What is an OTO? What is an ITO?

Destination Management Companies run tours on behalf of other brands. This is sometimes known as White Labelling.

The concept is simple but easier to describe with an example:

Let’s just say Jenny’s Cycling Tours wants to offer a tour to Italy. You have an Italian tour company called Totticesco Tours, and Jenny reaches out to you. She says ‘hello, would you like to run a tour under our brand?’

This means that from the guest’s perspective, they would be travelling with Jenny’s Cycling Tours.

So, when the guests arrive, you would hide all references to Totticesco Tours. Your team would be wearing Jenny’s uniforms (if she has uniforms), Jenny’s logo may well be on the bus, and whenever your drivers and guides refer to Jenny’s Cycling tours, they will talk as if they are employees of the company.

And then, when your guests arrive at the hotel, any welcome signage would be in the name of Jenny’s company. And so on.

Jenny’s company in this case is the Outbound Tour Operator. Your company is the DMC (or Inbound Tour Operator.) Sometimes this is also known as an ‘Incoming Tour Operator’, but for the purposes of this discussion, DMC is the term we’ll use.

Intrepid Travel , G Adventures and Chimu Adventures are three examples of large outbound operators who use local DMCs to run at least some of their tours. In some cases, it’s the exact same local DMC that runs the trips for all the major brands coming to their region.

You can read more about what a DMC does here and here.

We’re Talking About Package Tours

But, before we continue, one quick note – DMCs can do many things. They might solely book hotels, airline tickets, private tour guides, or ferry tickets.

For the purpose of this discussion, we’re talking about Fixed Departure Package Tours.

The tour would run on a specific date, have a fixed itinerary, and would include all hotels, transportation, guiding, and typically – most meals.

There Are Some Significant Drawbacks

Before we get onto the positives, let’s start with a cold shower. Here are some of the drawbacks of acting as a wholesale provider:

The margins are way lower. If you’re new to this, you won’t have much in the way of buying power with local hotels, and this is where the majority of your margin comes from on this kind of tour. Your first few tours might run at tiny margins that are not even worth it. But, if you think about those early days when you first went into business as a tour company – you didn’t make much money back then, did you? Well, this is like starting a new business, all over. To get that initial momentum, you need to accept that your margins on top of your costs might be tiny – think 5, 10%. In the short term, it will hurt, but this is the best idea for the long term. (We’ll explain why below.) As you grow and improve your operations, negotiating better deals with suppliers, your margins should begin to grow to something more healthy.
It’s a lot of work to get the tours together. Each brand has its own standards and guidelines. They have their own customer bases, with their own specific desires and needs. You’ll need to build a relationship with the OTO and learn their brand back to front. You’ll have to train your guides on how to act around OTO guests. The initial work of preparing a single tour is a lot more effort than what you’d put in for a single, one-off group. Sometimes the OTO will pick a different supplier. This bit hurts – imagine spending weeks designing a trip, only for a different local operator to be selected. It is a huge letdown and will make you wonder whether it’s all worth it.
You don’t get to keep the customer. At all times, you are representing the Outbound Tour Operator’s brand. This means you don’t get to use the customer’s email to stay in touch, and it most certainly means you can’t ask the guests for a review or try to sell a different tour to them. You’ll have to completely shut down your ‘salesperson’ instincts when you, or your guides, are with a group.
You’ll have to design a completely new tour for every brand. Brands really don’t like it when they discover that a tour they thought was designed just for them, then appears across the internet. Exceptions do exist for this, but they need to be very well communicated.
They’ll ask for your best guides. Yep, this will also happen. You can’t put a junior guide on a new tour for a new partner. This means that some of your best talent can be tied up in lower-margin trips.
You might be asked for a lot of content. Brands will need loads of photos and won’t pay any money for them. They also won’t give you any credit, either. This is something that inexperienced operators really struggle with, but you should embrace this – as it’s your job to make your brand relationship succeed. How? Well, keep reading.

Why Would You Do This?

If you’ve never run a tour for another brand before, it might feel a bit strange to hide your branding, and make less margin per tour…

After all, it’s your company that the guests are travelling with, isn’t it?

Well, not quite. Take Apple. They don’t manufacture any of their own products. In fact, all of them are made by third parties! Yet when you buy a new phone, it has the Apple logo on the packaging. Because Apple does the marketing and brings in the customers, it’s their brand that goes on the box. After all, it’s their reputation that is at risk.

So, if you can’t build your own brand, why would you want to act as a DMC?

Well – once a relationship is established, some larger outbound operators can send 10, 20, 30, 50 or even 100 groups a year. What could start as a single $25,000 once-off relationship, can – and does – turn into $250,000, $2.5 million.. Or even more. Every single year.

But putting aside the big-sounding numbers, what are some other reasons to do it?

You got into this business for the love of travel. And working with OTO is the best way to spend more time on what you do best – meaning you can grow your business without the burden of marketing. OTOs have the marketing resources and advertising cash to reach large and targeted audiences’ small tour operators only dream of. They take on that financial risk while your business grows, and you get back to doing what you do best – designing more incredible travel experiences!
Diversity makes your business more resilient. Selling tours to consumers directly is great, but it carries its risks. Perhaps one of your guides makes a joke about US politics to the wrong group of people, and you suddenly have 10 negative reviews. Maybe your SEO Rankings go down, the Google Ad algorithms change, or your Facebook campaigns suddenly stop working.
You’ll gain an additional source of income. The margins for white-labelled tours are lower (we’ll talk about this in a lot more detail, below), but it is a lot less effort compared to dealing directly with guests, and much lower risk. A solid OTO won’t cancel a tour 5 days in advance!
Relationships. Entrepreneurship is a lonely experience, but when a relationship blossoms between an OTO and DMC, you may well find yourself developing very strong, trusting friendships.
Operational excellence. Working with external partners is a huge spur to get better. If you’ve been dragging the chain on doing proper financial modelling, setting up solid documentation, and getting your legal and insurance all worked out, working with an Outbound Tour Operator is a great way to get that additional spark to make it happen.
Your bank will love it. If you’re ever applying for credit, the additional revenue and cashflow on your books is something that loan officers always like to see.
It’s great for cashflow. While you won’t be able to ask for payments 60 days in advance – like you would for FIT tourists – OTOs pay their bills. And they generally will pay for the tour 15-30 days in advance, meaning you’re never out of pocket. Compared to OTAs, OTOs offer a much better deal.
Your business will be easier to sell once you head into retirement. Having multiple robust lines of business makes the prospect of buying your business much less risky.
Once a trip is designed, it stays designed. It’s a lot of work to get a trip ready, but after a couple of groups come through, you’ll find that the trip needs a little ongoing modification. From there, you’ll be able to run it for years and years.

How Can You Succeed as an Inbound Tour Operator?

If you’re an inbound tour operator, you have one job: to make your partner happy. That’s it. You want them to be so happy that they send you more and more groups.

This is a simple list of things you need to do. Simple, but not easy:

Design a great trip that matches the vision of your new OTO partner.
Respond to emails quickly.
Be thorough and precise in your documentation.
Provide attractive pricing and payment terms.
Have loads of photo and video content ready to go.
Have your ducks in a row from a legal perspective. But, most importantly –
Run a tour that delivers raving customers.

What First-Time DMCs Need to Know

We spoke with an outbound operator who told us this:

“The biggest reason we get nearly all the way with a DMC, and then don’t reach a deal…is because of money. It really hurts to walk away from what could be a good relationship, but lack of business savvy means that less experienced operators put in terms that are deal breakers for us.”

Well, let’s talk about how to avoid that!

You should know that while it’s a lot of work, it’s not as difficult as it appears to figure out the basics. Outbound operators we spoke with agree that good, experienced DMCs all do business in more or less the same way. Here’s what you should know:

Remember that your partner’s entire revenue is the difference between what you charge them, and what they charge the customer. Many novice operators choke at the idea of their partner adding 30 or 40% as margin, but think about it – that’s literally all that they can make off the tour. Outbound operators deal with significant expenses – marketing, sales, travel agent commissions, customer service for months before the trip, refunds, insurance, fancy websites, booking software, Facebook Ads, Google Ads, Credit Card processing fees, office rent… Not to mention lawyers, occasional chargebacks, and 20-25% OTA Commissions. And then somehow in that 30 or 40% they need to find a profit.
Your partner may well end up with a higher margin on a sold-out tour than you. You won’t like this initially, but you should learn to love it! Think about it – you make your own margin no matter how many guests come – be it 1 or 20. But, on the other hand, the outbound operator only breaks even once they sell a certain number of spots. This means that they’re taking a risk, and because they’re taking that risk, they should get the opportunity to be rewarded if they sell out a trip. Just remember that many trips don’t sell out, so even though you may think you know the margin that your partner is making, there could be a chance that there’s something you actually don’t know. (Case in point – Intrepid barely made a profit in 2019, the golden year of adventure travel.) So, for this reason…
You need to make it as easy as possible for them to sell out their tour and make loads of profit so that they keep coming back to you. This usually means offering a discount based on head count – the fuller the trip is, the less you charge per head. This is a classic mistake that novice DMCs make. The world’s best and biggest DMCs always have a different rate for 6, 7, 8, 9, etc pax all the way up to the trip maximum. Yet novice DMCs do things such as pricing the same for 6-10 guests and then 11-14 guests, or putting a fixed price per guest for ‘8+ guests’. This is a surefire way to signal to an experienced OTO that you’re not focused on being the best partner you can possibly be.
Don’t ask for deposits, unless there’s an excellent reason to – such as a premium local hotel that demands upfront payment. Remember, asking for a 20% deposit is the equivalent of asking for almost the entire margin of a tour from your partner. This is a huge mistake in a business where cash flow is extremely tight (see the first point above). Asking your partner to cough up a large deposit that they may not be able to cover for months will often be enough for them to walk away.
However, do feel free to ask for references – or some kind of proof that the company you’re dealing with is a good operator. Following all the tips in this post requires a lot of work – and if it turns out your new OTO partner doesn’t actually have the ability to bring guests to your business, it’s all a waste of time. If they’re a new outbound operator, set no more than one date with them and let the trust build over time.
Sticking with only a fixed supplier base is a common issue with older DMCs. If your operator brings you a vetted supplier that they want to work with, just do it. It will be better for the longer-term relationship.
Net pricing is another bugbear issue with many newer DMCs. Unless you have an excellent reason, you should not attempt to offer a commission pricing model on your trips. You should stick with net pricing and let your partner decide the margins they want to put on top. After all, they are the ones taking the risk – and pricing risk is part of that.
Lastly, if you’re not comfortable with taking a smaller margin on just one trip, feel free to negotiate loyalty rates with your partner. It is not common for local DMCs to proactively offer volume discounts in terms of trips scheduled, but it is certainly appreciated by outbound operators. And, if you do this, you’re giving them the incentive to really invest into the relationship with you.

Tips On Collaborating on Your First Trip

Here’s how to kick off a great relationship and close the deal:

Make a good first impression. Come to the first call prepared. Bring evidence that you’ve researched the outbound operator and their customer. Ask great questions. Send an excellent summary of the call after you get off the phone.
Hotels matter. Expert suggestions and recommendations are key, but you also need the flexibility to work with hotels you haven’t yet worked with. The same applies to restaurants and experience providers.
Avoid generic or copy & paste itineraries. The first draft itinerary needs to have love put into it. If it doesn’t, this is a huge red flag.
Your partner will need to verify that your suppliers are worthwhile. Be specific about which suppliers you’re using. Be prepared to provide a detailed line item quote.
Make your guide available to have a chat before the trip, so that they can connect with your partner and learn the requirements of the brand.
Make sure you come with an understanding of the basic requirements of acting as a local DMC (such as your team not wearing your uniforms, making sure your suppliers understand that this is a different brand that they’re working with, etc.)
References from other companies are ideal. Even if you’re not asked for them, provide them proactively.
Professionalism – don’t make people chase you for quotes. Respond quickly, and make the outbound operator feel like they’re the only client. Give the same level of service all the way through; make sure that after you’ve closed the deal that you’re still providing a 10/10 level of service.
Online presence. A great website is critical, yet most full-time DMCs have horrible websites. (Note: we are a bit biased in saying this, but this feedback is very consistent across the board. Outbound operators see your website as a reflection of your brand.)
Proactive hotel blocking and supplier management. You’ll get a huge amount of egg on your face if you’re constantly having to switch hotels due to unexpected changes in availability.
Set up a good working rhythm with your new partner. Make sure to have a call before the trip to ensure that all details are squared away.
Be responsive to last-minute needs, such as last-minute additions to the group.
Be ready to take care of everything. Outbound operators want you to be their sole supplier.
Don’t add silly margins. Airport transfers, and private supplements, come in for serious criticism here. Everyone hates getting ripped off, and your partner will know you’re doing it.

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Depending on the business model, they may fall into different categories such as outbound, inbound, domestic, or ground tour operators. Outbound tour operators organize trips to international destinations, while inbound tour operators handle arrangements for tourists coming from abroad. Domestic tour operators arrange tours within a country, and ground tour operators work with travelers on behalf of foreign operators.

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A tour operator is a company that plans and arranges trips for travelers or travel agents. They take care of transportation, accommodation, activities, and more. Often, the tour operator functions as a wholesaler, and they buy travel products in bulk at discounted rates and sell them as packages. Some tour operators even own airlines or hotels. Depending on the business model, they may fall into different categories such as outbound, inbound, domestic, or ground tour operators. Outbound tour operators organize trips to international destinations, while inbound tour operators handle arrangements for tourists coming from abroad. Domestic tour operators arrange tours within a country, and ground tour operators work with travelers on behalf of foreign operators.

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Multi-Day Tour Operators 2021: Reshaping Supply Chains and Distribution

Executive summary, definition and core products, the tour operator value chain, digital marketing to become primary sales channel, rise of online booking platforms, the ongoing shake-up of supply chain roles, the new era of modernization and professionalization, covid-19 is driving new types of tours, the pandemic also accelerated many existing trip trends, collaboration and transparency across the industry, bankruptcies are coming, what will the new multi-day tour landscape look like as covid fades, related reports, report overview.

Perhaps no sector has been as badly hit by the pandemic as tour operators, given their intrinsic connection to cross-border travel as well as human interaction. Based on our research and discussions with over a dozen executives we see an industry on the precipice of major changes.

This report will focus on the global multi-day tour operator sector with a heavy emphasis on itinerary-based guided tours. We will also briefly touch upon packaged tour sales. Multi-day tours are one of the last truly offline spaces of the travel industry. But that isolation cannot last. This report will cover the structure of this complex and fragmented industry. We see an ecommerce revolution occurring in the next five years that will reshape the way the industry supplies and distributes its products.

We will also discuss the impact of COVID-19 on the industry and how we see the types of tours offered, and the operators themselves, evolving as a result.

What You'll Learn From This Report

How the complex supply chain of the multi-day tour industry works and the different kinds of businesses and tours that exist within it.
How digitalization is disrupting the industry and where the biggest new opportunities exists
How tour operators have responded to the pandemic
What we think the new multi-day tour landscape will look like as COVID-19 fades

Executives Interviewed

Matt Berna, Managing Director, North America for Intrepid Travel
Murray Decker, Chief Executive Officer of Tour Amigo
Gavin Delaney, CEO and Co-Founder of TravelStride
Tom Hale, Founder and President of Backroads
Travis Pittman, CEO and Co-Founder of TourRadar
Catherine Prather, President of the National Tour Association
Massimo Prioreschi, CEO of MT Sobek
James Thornton, Chief Executive Officer of Intrepid Travel
Gavin Tollman, President of The Travel Corporation
Enrique Velasco Jr., Chief Commercial Officer of Coltur Peru
With special thanks to Jared Alster and Tom Buckley, Co-Founders of Dune7 for their background contributions to this report

From our vantage point today it’s easy to take for granted that people across the world would use their leisure time to travel. But tourism — traveling for the pure enjoyment of it rather than for trade or religion — is a relatively recent development in the grand scheme of things. Most date the birth of modern mass tourism to Thomas Cook’s first package tour in 1841.

But naturally a lot has changed since then. Today’s tour operators need to be constantly evolving to keep up with the changing face of modern travel, as Thomas Cook itself discovered the hard way — and that was before a global pandemic hit!

This report will focus on the global multi-day tour operator sector with a heavy emphasis on itinerary-based guided tours. We will also briefly touch upon packaged tour sales. Though smaller than the hotel or airline industry, anyone seeking to understand leisure travel overlooks tour operators at their own risk. Pre-COVID, 12% of U.S. leisure travelers booked a package tour and in the United Kingdom, 47% of household travel spending was on packages. In Southeast Asia, 60%+ of trips were packaged or semi-guided tours.

Perhaps no sector has been as badly hit by the COVID-19 pandemic as tour operators, given their intrinsic connection to cross-border travel and human interaction. Many operators are still seeing revenues down 80%+ even as other sectors like hotels and airlines are moving to a recovery. The pandemic changed the kind of tours that people want, driving them to seek the outdoors, small groups, and domestic trips.

Based on our research and discussions with over a dozen executives, we see an industry on the precipice of major changes. It is one of the last truly offline spaces of the travel industry, but that isolation cannot last. There is a need for new modern tools and digital distribution, which presents a massive opportunity for new tech startups in the space. We see an ecommerce revolution occurring in the next five years, similar to what short-term rentals experienced following the success of Airbnb. This disruption will be compounded by the profound damage inflicted by the pandemic

In a sense, we already have a bit of a roadmap based on the past trajectory of other travel businesses that moved offline to online. We expect to see the emergence of a few major online booking sites and a new class of intermediary tech vendors to handle online bookings, channel distribution, and inventory management. Eventually this will lead to conflicts over direct distribution, repeat guests, and rate parity.

We also believe that the pandemic will spur a winnowing of the ‘middle class’ of tour operators. A wave of bankruptcies and mergers is likely to come leading to consolidation in a handful of large players on one side and on the other side a long-tail of specialist operators that can niche down into their own unique offerings.

The Tour Operator Landscape

The multi-day tour industry is a big tent that incorporates a wide range of operators, suppliers, and distributors. Plus, at times it seems like every company in the space is running a slightly different business model.

Our first step towards untangling this web of interconnected tour companies is to put a basic definition in place.

Tour Operator : A tour operator is any company that sells two or more trip components together. At its most simple this could be a flight, hotel, or cruise sold together as a package. More complex tour operators bring together transportation and accommodation with local meals, activities, and guides.

There are three core products sold by tour operators: packaged travel, itinerary-based tours, and small ship & adventure cruises.

Small Ship, Adventure, and River Cruising

Small expedition ships and river cruises are often included as within the tour operator space. The same travel agents that sell land-based multi-tours frequently also offer specialized cruises. Major booking sites like TourRadar have a prominent and well-stocked river cruise section.

This space was traditionally dominated by specialists, like Azamara, Lindblad Expeditions, orViking River Cruises and they are some of the fastest growing businesses in the entire cruising sector. Arguably these smaller companies have as much, if not more, in common with a land-based tour operator than they do with the mega-ships of Carnival or Royal Caribbean. And to that point, we are now starting to see traditionally land-locked operators go to sea, with, for instance, Intrepid Travel now offers polar cruises and TUI owns several cruise ships.

Small ships do meet our definition of a tour operator as they bring together transportation, accommodation, activities and food into one package. Though in fact, if you stop and think about it, so does the entire cruise industry, regardless of ship size. In order to prevent this report becoming too big we will set aside all cruising — big and small — as its own topic to be covered in future research. The rest of this report will be focused on land-based multi-day tours.

Packaged Travel

Packaged travel offers the distilled essence of our original tour operator definition. These trips bring together two or more components of travel supply, usually a flight and a hotel, and offer the combination together as a single new product to the consumer. The main selling propositions for this kind of product is typically value for money, convenience, or unique supply. Packages are also very commonly sold as an upsell for travel suppliers.

Given that there is no itinerary design included, this type of product is most popular among those looking to ‘fly and flop.’ These guests are typically looking to spend their leisure time off in a hot location with a cold beverage. And they want to access that vacation as easily and cheaply as possible.

One of the main reasons why package tours can offer better pricing to a traveler than assembling the separate components of the trip themselves is because, from the point of view of a travel supplier, packagers operate as an opaque selling channel.

Take hotels as an example: in a package the customer is quoted a single price for the entire bundle – flight + hotel + car – so the traveler can’t pinpoint how much they are paying per room night. This means that hotels can offer discounted rates without violating rate parity and undercutting first-party pricing. Tour operators tend to move high volumes so hotels are incentivized to offer bulk pricing for their business. Bed banks and global distribution systems often act as intermediaries providing wholesale supply to tour packagers.

Convenience is another main driver of packaged tour sales. There is a large segment of consumers, especially in Europe, that don’t want the stress and confusion of booking all of their own travel arrangements. While those of us that have the most severe cases of the ‘travel bug’ may have turned booking travel into a hobby (perhaps many of you reading this), we can admit that this is possibly not the most fun part of a trip for an average vacationer.

Another reason why a traveler might pick a packaged tour operator is because they can offer exclusive supply. Perhaps there is a resort that the operator owns and therefore the only way to visit it is by booking via a package. One of the best examples of this is TUI owns or operates over 400 hotels to ensure it can control the guest experience and provide access to rooms in supply-constrained markets like Cape Verde. It also owns nearly a dozen cruise ships and several charter airlines. Jet2 also follows a similar model with its own in-house airline that complements its vacation packages as it can offer uniquely convenient airlift for its guests only.

Dynamic Packaging

One of the most exciting developments in the packaged tour space is dynamic packaging. This is a relatively new development in the packaged tour space driven by the growth of tech connectivity in the industry. The concept is that, rather than operators or agents manually pulling rates and building bundles by hand, algorithms automatically create package deals live during the guests’ shopping experience.

The next step for this market is the development of open platforms that plug into suppliers’ booking engines and allow dynamic packaging ‘as a service.’ For example Hotelbeds offers dynamic packaging via an API that could allow for this. Third-party platforms for bundling opens up a whole new world of plug-and-play upselling capabilities for travel suppliers that might not have traditionally considered a packaged tour product, although it also brings with it the potential for rate parity issues.

Airlines have long used packaged tours as an upsell to drive revenue and margin on the flight products they were already selling. These bundled upsells often accounted for a small slice of revenue. JetBlue in a 2018 investor day disclosed that its attach rate for JetBlue Vacation was just 1.5% of transactions. However these small percentages can add up to big dollars, like at LatAm which sold $22 million worth of tour packages in 2020, still less than 1% of group revenues. But the package revenue shares can go quite high, even at a traditional mainline carrier. Japan Airlines Group (JAL) — certainly not a discount packager like Jet2 — sold $485 million of packaged tours in 2021, accounting for ~10% of group revenue, according to IdeaWorks .

Most airlines, if they sell tours at all, operate closer to Jetblue with the business driving a low single-digit share of group revenues. But JAL and other exceptions prove just how high the numbers could potentially get. Many airlines see today’s low package numbers as a mere starting point from which to build significant ancillary revenue streams to complement their unbundled retail strategies. Dynamic packaging has made this far more feasible and now airlines of all types from AirAsia, Allegiant, and EasyJet to Emirates and American Airlines are selling tour packages.

In the past, standing up a packaged tour offering at an airline would require a lot of time-consuming negotiations with hotel and car rental suppliers and even after all of that work, supply might still be limited. Airlines are in the core business of selling flights and not negotiating hotel wholesale rate contracts. With dynamic packaging airlines have the ability to tap into B2B platforms that can build bundles around their routes with relatively low lift. Bedbanks, like Hotelbeds , GDSs, like Amadeus , and tech vendors, like Switchfly all now offer dynamic packaging tools. This means that in today’s fast evolving landscape, airlines can add new routes and immediately be selling dynamic packages around that destination on launch.

The development of dynamic packaging further blurs the line between a tour operator, like a TUI, and an online agent, like Expedia. If JetBlue (supplier), TUI (operator), and Expedia (OTA) can all sell the same flight plus hotel package, what is fundamentally the difference between these three companies?

We believe that online travel agencies like Expedia and Booking will be some of the biggest beneficiaries of the move towards dynamic packaging and the above blurring of industry lines. In a dynamic world, having the most possible permutations of trip choices is a key differentiator. And the OTAs sit in a sweet spot where they have strong pre-existing direct customer relationships while also having millions of hotel, flight, and car listings across the globe already live in their databases. When guests shop for a flight, the OTA can then offer them the upsell to add on a hotel room or car booking, all for one packaged rate. The discounted package price is calculated automatically on the fly based on the unique combination of travel choices selected by the shopper. The discount can come from specific wholesale rates pushed by the suppliers to the OTA or the booking site might just choose to algorithmically reduce its commission margin to encourage an upsell to a higher ticket purchase. They can also resell their inventory and technology as white-label dynamic packaging tools to other agents, hotels, and airlines. Both Booking Holdings and Expedia as well as smaller OTA players like lastminute.com have all been running experiments around the best way to sell tour packages. Expect to see more developments in this space.

Itinerary-Based Tours

Itinerary-based tours are, arguably, the heart of the tour operator industry. These tours go beyond simply bundling component travel products, adding on top of that core package a layer of local expertise and itinerary design. These tour operators will be the focus of the rest of this report.

Price is not often the main selling point here. Rather, the convenience of not having to plan, the assistance of a guide, or the uniqueness of an itinerary is the main selling point. There is quite a lot of variety within products offered in this space.

There are three main variables that we can use to define the main types of itinerary-based tour products:

Fixed-Date Departures vs. Custom: Fixed date tours are offered with a pre-scheduled departure date and a set itinerary. Travelers buy these pre-built itineraries off the shelf. In contrast, custom tours are built to suit each individual guest with a unique schedule and departure date.
Guided vs. Self-Guided: Though the classic image of a tour includes a guide leading a group, this does not always have to be the case. Self-guided tours are growing in popularity. In this case, the traveler buys a travel package that can include local connections, activities, meals, and suggested sights, but no in-person guide to contextualize the destination.
Group vs. Individual: This has more to do with the buying behavior of the guest than the actual itinerary on offer. In group travel, the entire tour is booked up by a single organization, perhaps a school group, work retreat, or a large family. On the other hand, individuals traveling book a single slot as part of a larger overall planned departure that combines many other individuals or a small group of travelers that don’t know each other.

We can mix and match these different variables, offering for instance a guided group fixed date tour or an individual self-guided custom tour.

In addition to the main products on offer, there are two primary layers of operators in the itinerary-based space. One is based on the source market that the travelers buying the tour are departing from, and the other based on the destination market that the tour is taking place in.

Outbound Tour Operators: These tour operators service international travelers. They typically focus on a single origin market but often service multiple overseas destinations. Outbounds specialize in the market that travelers purchasing a tour are departing from and can provide native language marketing, sales, and customer support. They also have the cultural context to understand what kind of itineraries may appeal in their home market. Outbound businesses may operate their own in-destination trips or outsource the local logistics to a destination management company. An example would be a UK based tour company that offers British travelers a variety of trips across Asia and continental Europe.
Destination Management Companies: Also known as inbound tour operators or receiving tour operators. These operators receive inbound international travelers. They typically focus on a single destination market but often service travelers from multiple overseas origins. By specializing in a single destination, they have the local know-how and logistics to ‘make the trains run on time.’ They can sometimes use their local connections to source unique experiences. DMCs usually contract with an outbound tour operator but increasingly may sell direct to the overseas consumer. An example would be a local Peruvian tour operator that specializes in running Machu Picchu treks for guests coming from many different outbound operators and nations.

The line between outbound and inbound operators has always been blurry and it is only getting hazier. The core distinction we will be making when referring to outbound operators vs. DMCs is the difference between retail-specialists focused on the source market and logistic-specialists focused on the destination.

These terms originate from the cross-border market but, especially as local tourism boomed during the pandemic, have a place in domestic markets as well. While they may not technically be ‘outbound’ operators when within the same country, there can still often be a separation between the retail tour operators and their domestic DMC partners or subsidiaries (though one could even argue New York City might as well be an outbound foreign market from the perspective of a Utah river guide).

Illustrative Example of the difference and connections between Outbound Tour Operators and Destination Management Companies.

With the baseline definitions and products understood, let’s examine the lifecycle of how a tour is created and comes to market in the land-based tour operator space.

Our model of the tour operator chain has three layers of value add. It starts with the supply of core travel products like hotels, flights, trains, and cars. These ‘raw materials’ of the tour might come from direct contracting with an airline or via a reseller like a bed bank. Some fully integrated tour operators even own their own charter airline or resort properties.

The next layer is the tour operator itself. “The tour operator is the manufacturer,” says Catherine Prather, President of the National Tour Association. Unlike a hotel or airline that is fundamentally anchored to a physical asset, tour operators sell a value-added travel service not tied to a single tangible product. By that we mean that tour companies ‘assemble’ unique trips by taking building blocks from other travel suppliers and adding an additional layer of intangible value-add. That value-add might be local expertise, cheap bundled pricing, or peace of mind. This transforms the raw materials into a more valuable new product which they can resell into the marketplace.

We distinguish here between tour packagers that are doing pure bundling and itinerary-based tours where an additional layer of in-destination curation and expertise is used in the ‘manufacturing’ process. A company like TUI is still a multi-day tour operator at this tier. It ‘manufactures’ its own tour products and retails them through first-party channels and also re-sells through agents and other distribution channels. But the tour products it offers are mainly a bundling of different supply components. In contrast, a G Adventures both bundles the supply components and adds an additional design component by planning daily activities and arranging for local guides.

There is also the opportunity in this layer for wholesalers and retailers. Specialist DMCs often design local tours that can be resold to larger retail travel agencies that can tap into their local market of outbound travelers.

The final layer is that of distribution. There are three primary channels. First is the direct channel driven by in-house sales and marketing efforts. Then there are the two major intermediaries in the space, online booking sites, which operate on both commission and advertising models, and travel agents. It should be noted that tours are one of the last great bastions of traditional travel agents (along with business travel). A very significant volume of tour products is distributed by the large travel consortia and even, in some countries, by brick-and-mortar retailers. This is because tours are one of the most complex travel products, a result of the above ‘manufacturing’ process, making a human intermediary much more valuable.

A hotel room might have a handful of core attributes (star rating, price, location, room type) and several more secondary ones (Wi-Fi, pool, view, floor height). But even the most basic tour can have dozens or more key attributes (departure date, size of group, length of trip, itinerary variations, level of physical activity, type of accommodation, age of participants, etc.). This creates difficulty to code for tours in the back end, as well as for consumers to shop and compare multi-day tours. This has made it doubly hard for online booking sites to take off in the space; however, these challenges are slowly but surely being overcome and digital platforms are growing in prominence as distributors of tours.

We understand that we have tried to simplify a very complex space and so there may be many nits to pick with this diagram. But we think that these core mental models of three main tour products (packages, itineraries, and cruises) sold via layers of value (supply, operation, and distribution) is a useful way to help decipher the tangle of different operators in this industry.

A lot of the confusion in the space seems to stem from the many different permutations of how vertically integrated an organization chooses to be and what permutation of products they choose to sell. But by building this mental model of the industry we can better see past the superficial differences of each specific company. A lot of the variation we see across tour companies is often reflective of different choices about what parts of the value chain to vertically integrate and what products to sell. But within each specific part of the value chain in isolation, business models are often more similar than they may first appear.

For example, tour operators that run their own in-destination programs vs. ones that outsource to a DMC are not two fundamentally different types of tour companies but are instead making different decisions about how vertically integrated they want their organizations to be. Or a travel agent that sells tour packages is best thought of as vertical integration between the ‘manufacturing’ stage of packaging process and a distribution channel, rather than as a wholly separate kind of company from a tour operator with a large first-party salesforce.

Technology Shakes Up The Multi-Day Tour Industry

It is clear from our research that a wave of technological change is washing over tour operators as we write. Tours are one of the last major travel industry categories still heavily built off analog tools and manual processes. Catalogs and phone calls are frequently a part of the tour sales cycle.

Research from the Adventure Travel Trade Association (ATTA) suggests that just 8% of bookings came via online travel agents. And that more than two-thirds of bookings came from some form of offline channel. Though this was just a small sample and only representative of a niche type of tour operator, it speaks to just how small online distribution platforms are in this space.

Travel has attracted significant investor attention — nearly $30 billion of funding over the last five years — much of it focused on the digital transformation of the industry. Online platforms, which started in just airlines and hotels, have pushed into nearly every travel market. Nowadays practically every sub-sector from short-term rentals and business travel to day tours and packaged tours has either a major public company or a “unicorn” private startup valued at more than $1B, oftentimes both. All that is except for multi-day tours.

Tours and in-destination activities have actually been one of the fastest growing categories of travel investment, raising nearly $900 million in 2019, but almost all of these dollars seem to focus on single-day, rather than multi-day tours. Three of the largest startups in multi-days tours — Evaneos, Tourland, and TourRadar, have collectively raised under $300 million in capital while activity OTA Klook has raised $720 million by itself.

Part of this is the challenge of marketing complex tours online as well as resistance from incumbents content with the old ways of doing business. But changing expectations among employees, supplies, and customers, accelerated by COVID-19, are driving digital innovation to the fore in the sector.

This digital ‘splash’ will have ripple effects up and down the entire tour value chain, affecting everything from the smallest on-the-ground guide to the largest corporation. Gavin Tollman, President of The Travel Corporation, one of the largest tour operators in the world, believes that, “digital has really been one of the greatest evolutionary changes during [the pandemic] for us.” And being the last major travel sector to digitize does have a silver lining: by drawing on lessons from other sectors, we have a pretty good road map for how the industry may be transformed.

As with hotels and airlines, digital marketing will only continue to grow in importance to the industry. Naturally, this means that search engine marketing budgets will have to grow.

This is especially true in the U.S. market. Matt Berna, Managing Director, North America for Intrepid Travel, explained that, “[in America] We spend the lion’s share, easily 80% of our budget, on direct digital marketing strategies.” Although Berna caveats that in other markets, like Australia, travel agents and retail storefronts remain key marketing tools, that a large tour operator like Intrepid is so heavily invested in digital marketing should be a sign of the times.

But the rise of digital marketing goes beyond performance marketing. For instance, Search engine optimization is arguably just as important and when done right is not cheap either. “We’ve done a lot with SEO,” says Berna, “building a lot of new content, writing content, building out our pages and website.”

Digital marketing also involves building brand recognition at the top of a sales funnel moving online, with brand advertising shifting to platforms like YouTube and ‘word of mouth’ being spread on social media. In fact, Gavin Delaney, CEO and cofounder of online tour site Travelstride told us that 90%+ of customers start their tour research online.

Speaking to the power of social media, Tollman told us, “if you said to me, what has been one of our greatest success stories in the last year? It has been the use of social channels to tell our stories in a robust way that people can look and see. When the world was shut down and we were still operating trips, how powerful it was to show people that they could still go and show them what we were actually doing.”

Directly linked to the growth in digital marketing techniques is the rise of online booking platforms for multi-day tours. That’s primarily startup websites like TourRadar, Tourlane, Evaneos, and TravelStride. Today, these come in two flavors: commission-based agents (e.g. TourRadar) and advertising-based listing sites (e.g. TravelStride). There are still few true metasearch sites that search other online booking sites due to complexities of itineraries in the space.

Complex itineraries make it difficult to convert online intent to online bookings and Travelstride’s Delaney says that two-thirds of the industry still ends up being booked over the phone or via another direct channel through an operator or agent. “One thing to keep in mind,” he explains, is that “a hotel and a flight, they have five key data points… a departure date, an arrival date, a return flight, a price, a seat type, right?” And while alternative accommodations may expand that to 10 data points, Delaney points out that, “In a multi-day tour, typically, we have 125 data elements… does day three include breakfast? What are you doing in the afternoon of day four? What’s the average physical level? How much walking is there? Is this appropriate for an age group? … [Multi-day tours are] a step function, more complex in terms of how you organize that information to make it useful for travelers to search and feel confident enough to book.”

Adding to the difficulty of driving online sales is that these are expensive bookings, the average transaction at TourRadar is $2,500. But Travis Pittman, CEO and cofounder of the online booking site says that it regularly takes “bookings up to $10,000, $20,000.” In contrast the average transaction on Airbnb is ~$400.

Despite these challenges, online booking sites are making strong headway. We note that large online travel transactions are becoming increasingly common. To continue the previous example, despite its low overall average transaction size, Airbnb’s fastest growing category is long-term stays of 28+ days which can easily run up to $2,000 – $3,000 ticket sizes, all sold online.

And as aggregators of both tour supply and online demand, multi-day tour OTAs are uniquely positioned to win in a digital marketing heavy environment. We believe that the industry will inevitably close the gap between the 90% of travelers that start their searches online versus the third of travelers that end up completing this process by booking online.

For starters, consumers are increasingly coming to trust these online platforms. To that end TourRadar’s Pittman highlighted that, “a key part of TourRadar has always been reviews… that’s how we began really, and that’s stayed throughout.” Those reviews do more than just establish credibility with guests, they also help from a search engine optimization standpoint.

Reviews paired with the wide range of tour supply on the platform, means that an online booking site will probably be a highly ranked organic result for high intent tour searches. This also drives a “billboard effect” where online users that are “passing by” while searching for travel inspiration repeatedly come across the same few multi-day tour aggregator and review sites.

The guest starts by searching for a tour in Peru but also considers one in Columbia, and ultimately shifts focus to a Costa Rican trip. The destination specific brands will change each time, but TourRadar, TravelStride, and others will keep popping up. This familiarity drives trust in the platforms and makes users more likely to eventually book via an online intermediary, even if not for the destination they were originally searching for.

These platforms also have an advantage in online distribution by means of the wide range of supply that they aggregate. This comprehensive supply lets them drive repeat customers who want to explore a variety of different tours and destinations. An Argentinian tour specialist will struggle to drive guest loyalty because as Delaney points out, “even if you have the best possible trip, most people won’t go back to Argentina twice in a lifetime.”

It’s more than that, customers can be quite picky about even simple things like departure dates. Says Delaney, “the vast majority [of tour customers], even when they have a great time with that tour operator, … It’s just like, oh, I really liked Intrepid, but their itinerary dates don’t quite match up and G Adventures has a very similar one but their dates … match up with what I want better.” This mercenary behavior plays into the hands of online booking sites and other aggregators like travel agents who have cross-brand supply and allow for comparison shopping across dates and prices for similar itineraries.

This means that all else equal, the same exact customer probably has a higher lifetime value to an online booking site than they do to a regional tour operator. Pittman emphasized that, “CRM [customer relationship management] and bringing customers back is an extremely important part of this journey.” Accordingly, TourRadar and similar sites can ‘afford’ to outbid regional tour operators in performance marketing because even though they may end up paying more in dollar terms, they could still well be earning the same or an even better ROI on their ad dollars than what the regional specialist was targeting.

The final piece of the puzzle comes from the focus and size of an online travel agency. As we have seen with flight and accommodation OTAs, these booking sites eventually grow to have larger marketing budgets than most individual tour operators can hope to muster. This, paired with the above ROI efficiencies, let online booking sites win more online performance marketing search auctions, more consistently than other operators, driving traffic.

All of this means that if, as we believe, the amount of multi-day tours being booked online grows, then the relative importance of these OTAs is also likely to grow.

In our previous section on the tour operator value chain, we discussed the difference between local wholesale tour operators and outbound retail tour operators. In the past these two businesses had a mutually beneficial relationship. Running dozens of local operations was impractical for the retailer while for a local operator, in Morocco say, it would have been unthinkable to directly market tours abroad in multiple countries.

But the accessibility of online marketing and digital distributors has upended this relationship. It has opened a whole new world of opportunities that were never before possible while also bringing with it a whole new slew of challenges. “We’re seeing DMCs also work with us now,” says TourRadar’s Pittman. “… They’re [DMCs] seeing the opportunity to go direct to market. So they’re not just reliant on these bigger operators to get to [market]”.

That local DMC in Morocco can now list its tours on an online booking site and collect bookings from across the globe. Though it will have to pay a commission – likely 15% to 25% – a DMC can now cut out the intermediary and bring those retail margins in-house. All of this without a direct booking engine! If the Moroccan DMC chooses to invest in an English-language webpage and a modest AdWords budget it could be in the direct tour business across the U.S., Canada, UK, and Australia almost overnight.

“What’s happening is that the producer and the consumer are getting closer and closer and closer,” says Enrique Velasco Jr., Chief Commercial Officer of Coltur Peru, a local DMC. “They [the producer and consumer] can start speaking to each other. Whereas before, they were thousands of miles apart, there was no communication between them.”

Wholesalers are now competing directly against their retail partners. And to make matters more confusing, many of these retail tour operators also distribute through travel agents and OTAs. That means that the same exact tour could well be marketed to the consumer in four different places (direct via wholesaler, direct via retailer, indirect via OTA, and indirect via travel agent).

Adding in another layer of complexity, Pittman told Skift that TourRadar plans to launch a new platform for redistribution by the end of the year that will, “basically allow any third party to distribute the inventory that we have… the GDS of multi-day [tours].” The ability to push the same tours through as many distribution channels as possible will never have been easier.

On the one hand, this breadth of channels means more shots on goal and more chances for the right guest to find the right tour. As TTC’s Tollman puts it, “Consumers are going to buy travel where they want to buy travel. And we will ensure that we are in those places for them.”

But on the other hand, imagine a physical store putting the same exact products right next to each other on the shelf, just with slightly modified packaging. Each variation with different pricing and margins. That would never fly in the real world, the consumer would optimize for lowest price and the manufacturer for best margin until only one product remained.

The main reason it works with tours is because of confusion in the space and unsophisticated customers that prevent true comparison shopping. Travel agent clients today are unlikely to be comparison shopping with online travel agents or direct channels. And guests are often afraid to book complex and expensive itineraries online or with a party they don’t have a pre-existing relationship with.

Compounding this, many tour operators – both wholesale and retail – are heavily reliant on third-party sales. Though they see the potential of direct, it is currently too small a part of their business to be self-sufficient and they are afraid that too sharp a pivot towards direct will alienate distributors and result in a net overall decline in sales.

But we would argue that fear and opacity are not a strong foundation to build a business on. The clear trend in online shopping is towards more transparency across products and prices and for the rising generation of customers to be more comfortable with making large ticket purchases online. Plus, over time, tour operators will become more confident in the size and stability of their direct channels and more willing to confront distributors over commissions.

We think that the blurring of industry lines will drive several reactions. It will cause distributors to delineate their value add more clearly, with travel agents for instance retrenching into high-touch luxury service with many add-ons and complex arrangements. Wholesalers will be able to compete on price as direct-to-consumer wholesale clubs like Costco do today. And retailers will be driven to vertically integrate so that they can offer more destinations, in turn driving repeat guests, and potentially also create more exclusive supply arrangements so that they cannot be undercut or resold by other players.

James Thornton of Intrepid told us that, “I think we’ll increasingly be more vertically integrated as an organization. In 80% of the cases it’s our DMCs operating the products that we sell [and] you’ll see us potentially move into other aspects of verticals. It might be more accommodation, it might be having exclusivity of certain routes or departures. You might see us have more small ships, for example.”

Let’s face it, most founders of a tour operator didn’t jump into the business out of their love for programming. They did it for the love of travel! But with the world going the digital direction we describe above, the need to modernize and professionalize many tour operators, especially smaller ones, is becoming increasingly urgent.

Many operators still keep the details of their tours logged on excel or even pen and paper. And we know of operators and travel agents that need to make multiple phone calls to confirm a booking. According to Tourism Research Australia, 88% of bookings are still made manually through email booking requests and offline methods. A survey by ATTA found that just 50% of operators they surveyed have an online reservation system that takes credit cards. This won’t fly in the coming era of tour operators.

In order to drive effective direct to consumer capabilities, tour operators will need to develop a full technology stack. This includes responsive websites with SEO in mind, booking engines to capture sales, customer relationship management software to track guest inquiries and bookings and MarTech tools for performance advertising, retargeting, and email marketing, among other techniques.

James Thornton told Skift that Intrepid Travel wants to have “more focus on customer experience on the website. [We are] trying to improve the overall digital experience both at the point where people come into the brand and transact with us, but then also when they come on the trip more of the documentation being served up in a digital format, the feedback loops being in a digital format. And that just helps us as an organization be able to react more real-time than previously we would.”

Shockingly to us, Intrepid Travel only installed its first CRM system just three years ago. This is a standard sales and marketing tool for major corporations and Intrepid’s late adoption of this software speaks broadly to the industry’s need to modernize its tech stacks.

We should note that Intrepid still managed to attract 460,000 customers a year and a 25% repeat rate without CRM software. Pretty good. But it could be better, and looked at from a glass half full perspective there is a huge amount of untapped potential ahead for Intrepid to grow into as it modernizes its sales operations.

Even though Massimo Prioreschi, CEO of MT Sobek, a boutique mountaineering and outdoor adventure company, runs a smaller business than Thornton, he too has been investing in new technology. “In the last 18 months we’ve revamped our reservation system, phone system, CRM, and guest portal” he says. “This time of fallow, where there weren’t guests traveling”, Prioreschi explains, “[was an] opportunity to upgrade our technology. And so I think in five years, our guests will feel this ease of dealing with us.”

Above these core investments, a particularly exciting tech development we heard about came from The Travel Corporation, which “started using robots for all yield management,” according to its President Tollman. “We have dynamic pricing on all of our trips,” he explained. “And what that has done for us is … if costs are added to [a tour], we can adjust them dynamically as we move. So we are not stuck with flat pricing, which is one of the most high-risk features of the old way that tour operators used to work.”

This kind of revenue management is industry standard in the airline and seeing growing adoption across hotels. Based on this cross-industry trend, while TTC may be an early adopter, we expect more tour operators to adopt similar pricing tech.

And all of this is just on the direct-to-consumer side.

The technology for business-to-business (B2B) distribution is evolving as well. “Historically it was PDF and Excel files,” Berna explains. “[Peak DMC would] get a quote and then they’d send it to an Intrepid salesperson, who would make it look good and send it to the client.” That approach won’t fly anymore. Berna says that, “technology is going to improve a lot … [to allow us to] provide quicker quotes, more accurate quotes, better looking quotes so that DMC can work directly with those tour operators.”

Tour operators aren’t exempt either as they have distribution partners of their own – online and offline travel agents – that will be demanding modern booking capabilities. For instance, Tollman told us that The Travel Corporation is, “evolving our APIs to expand and let agents actually get even more content, and more content that’s relevant. Not just dates and rates, but all robust content there too.” Interestingly, he sees potential for APIs to expand the company’s distribution reach even outside the bounds of traditional channels, teasing that “We are also looking at a number of distribution channels, which typically have never sold multi-day tours.”

And although the largest operators in the world are starting to evolve, the reality is that most small and medium sized tour companies lag significantly behind. Here’s a striking fact: Murray Decker, the CEO of multi-day tech vendor Tour Amigo, told us that, “of all the operators we’ve had discussions with, about 95% of them actually don’t have a dedicated multi-day tour [backend] system, or are using a mix of multiple systems that are designed for other travel business (day tours, activities, etc).”

If there is to be a post-COVID gold rush in multi-day tours then these back-end vendors, like Tour Amigo, are selling the pick-axes. Inventory management, content management, and booking engines are part of a standard digital retail tech stack in airlines, hotels, short-term rentals, and most recently day tours. Not only do they allow for operators to keep up with evolving distribution channels, but there is a major book-keeping and business management benefit as well.

Digitizing inventory allows for more advanced sales analytics, quicker account reconciliation, fewer back-end staff, and reduced errors. Murray estimates that at large travel agencies and tour operators the error budget due to manual loading mistakes can run into the millions of dollars.

The path forward is clear to us: DMCs and tour operators alike will need to buy or develop new back-end systems that can deliver live pricing and availability. Intrepid’s Matt Berna reflects that, “I used to talk to product managers and ops directors about how great our products were. Now I talk to data science engineers.”

These backend systems and APIs are increasingly table stakes to participate in the current digital tour operator landscape. But they don’t come cheap and an unfortunate reality is that, especially in the wake of COVID-19, many operators will not have the cash on hand to upgrade these systems, shutting them out of modern tour distribution. We see this creating a class of have and have nots, especially in the more commoditized product offerings. This will drive some to sell out to more sophisticated tech platforms or simply to fall behind and go out of business.

The Impact of COVID-19 on the Multi-Day Tour Sector

Up until this point in the report we have discussed the structure of the industry and how long-term changes in technology are causing tour operator business strategies to evolve. In this section we will discuss the more immediate changes caused by COVID-19. This includes both new trends in the actual tour products being offered, as well as how some industry-wide practices and standards are evolving in the wake of the pandemic.

“We are going through a seismic shift in our world,” says Gavin Tollman, “the fact is we’ve entered just an entire new world.” COVID-19 has caused a dramatic shift in what kind of tours that travelers take. Some of it is due to changing preferences, such a desire for more cleanliness and safety, while other changes are due to government orders such as the closing of borders. Regardless of the reason, tour operators have responded by creating new types of tours for the pandemic era.

Rise in Domestic Tourism

The biggest new trend to emerge from the pandemic is the new emphasis on domestic tourism. At Intrepid Travel, Berna tells us that, “before COVID, about 60% of our customers worldwide came from Australia. … It’s flipped now. The US is our biggest booking market for Intrepid worldwide… 50% now of all travelers are American.”

Tollman of The Travel Corporation concurs. “Our domestic US travel brands [are doing] unbelievably well. Our domestic Australia brands, pre their last shutdown, [were also] unbelievably well… One is really beginning to see whether it’s in South Africa, the U.S., Australia, or the UK, domestic first, near-destination second, and international third.”

Focus on Sustainability

The other major new shift has been towards a more thoughtful understanding of travel’s impact on ourselves and the world around us. “If you said, what is fundamentally changed,” Tollman asks, “it’s going to be sustainability.” His family of tour brands are making significant shifts to be more respectful of the communities they visit and have pledged to be carbon neutral by 2022.

James Thornton, the CEO of Intrepid Travel was emphatic about this point. “Increasingly people want to be purchasing and working for and buying from companies that are truly sustainable, not companies that say that they’re sustainable, but companies that really are and have the independent accreditations to back that up,” he explained. Intrepid Travel is the world’s largest certified travel B-Corp and has been carbon neutral since 2010.

This is not just a COVID shift but a generational one, according to Thornton. “Increasingly millennials and gen Z are wanting the higher standards of environmental and social expectations when they travel. … Younger people are expecting brands to reflect their own values and particularly think about things like climate change.”

The shift towards sustainability doesn’t have to come at the cost of the trip experience, and if executed thoughtfully, can even enhance the overall experience. Thornton gives the example of a trip to Cambodia which would typically have an internal connecting flight. But the airport is a generic and stressful experience. “What we’ve now done,” he explains, “is remove the flight aspect of that trip and introduce a boat trip. One, it’s a more relaxing experience. Two, it’s a more local experience. Three, it emits a tiny proportion of carbon by comparison.”

Thornton also believes that demand for domestic travel can continue due to its climate impacts. “I think there’s going to be more questioning about just jumping on a plane to fly to the other side of the world, to go there for a week,” says Thornton. “I think you’ll see a trend towards people traveling closer to home more frequently, but then when they go for longer trips overseas, those trips will probably be a bit longer in nature to factor in the carbon emissions.”

Small Groups

There has also been a shift towards smaller groups, custom itineraries, and more high-end accommodation. This kind of travel provides extra space, flexibility, and exclusivity which are perceived as cleaner and safer, the ultimate luxuries during pandemic.

But rather than this being a new trend introduced by lockdown, Catherine Prather of the National Tour Association explains, the move towards small groups, “was already happening prior to COVID and that’s really been amplified [by the pandemic]. I think that’s something that’s really just here to stay because people were already wanting to have a smaller group experience, but that was being driven by not only generational changes, but also by people wanting those authentic experiences. It’s easier and better to have that with a smaller group.” She also highlights luxury travel as, “something that was already happening.” But now, Prather says that “People equate luxury with safety and cleanliness and security.”

Active Vacations

Another big COVID-19 winner has been active and outdoor vacations. This was already a fast growing trip type but the perceived safety of the fresh air and the backlash to lockdown really poured a lot of gas onto the fire for these tours.

Tom Hale, Founder and President of Backroads, a leading bike and active tour operator, told Skift that, “demand for active travel was already growing pre-pandemic, and COVID has accelerated the trend with people wanting to spend more time outside in a safe and active environment.” 2022 bookings at Backroads are currently 70% above 2019 levels, its best historical year ever.

Further reinforcing the above domestic trend, Hale spoke to how Backroads quickly pivoted to add domestic capacity, leading to them taking “20% more guests on trips in the US than we ever had before.” Hale sees the trend towards smaller, active trips continuing even as the pandemic fades. “We expect to see huge demand for Europe and other international locations in 2002] … and predict that … 2023 will see unprecedented numbers of active travelers.”

Outside of product offering, another major industry transformation due to COVID-19 that many spoke to us about was a new sense of teamwork and transparency across the industry.

“There has been a lot more collaboration,” says Prather, “hey, this tour can go, but I really need five extra people. Do you have clients who may want to experience or go on this trip?” This is partially born out of a sense of camaraderie brought about by the near-death experience of COVID and a realization that it will be a group effort to keep the sector afloat.

“People are a lot more open,” agrees Matt Berna. “What I mean by that is DMCs will go to the partners and say, ‘Here’s our costs. You can see them, but I need to make 5%.’ … Nowadays, it’s open books. We’re all in this together. We need to all make money, but we also need to see where our costs lie… That trust piece I think that still will continue.”

There is also an element of working together to develop best practices and industry standards in the face of a rapidly shifting disease picture. “There definitely has been a lot more sharing of information,” Prather explains, “How are you dealing with this? Are you asking for proof of vaccination? Are you masking on your tours?”

The final reality of COVID is that despite many operators’ best efforts – all of their cost cutting, pivots to new tours, and industry-wide collaboration – many will not make it through this crisis. There have been far fewer bankruptcy cases than expected, but we believe that this is mostly because of emergency funding, lenient creditors, and forgiving customers. All of this will soon begin to wear out.

Prather warns, “I don’t think we’ve seen the shakeout as much yet in terms of true consolidation because of the PPP loans [A U.S. small business aide loan] and idle loans and things like that, that have helped people survive.” Gavin Delany of TravelStride goes even further, “there definitely is going to be significant consolidation. A number [of tour operators] have already gone out of business, mostly smaller ones.”

Many businesses went into hibernation but may find that restarting is more challenging than expected. For instance, many tour operators’ first trips back will be 2020 tours rescheduled into 2021. And while it must feel good to be operating again, the timing of cashflows can be deadly. There are few new dollars coming in the door as these were mostly previously paid for, but staff salaries and suppliers need to be paid all the same. This further draws down already diminished cash reserves.

Delaney says that, “I’m actually sort of surprised at this point. I would have thought more companies would have gone out of business. So up until this point, they’ve been fairly resilient.” He points out another challenge of coming out of hibernation. “I think part of the challenge is the rebound will actually be slowed a little bit by the fact that [tour operators] cut all these sales staff. So in June, pre Delta variant, we had this surge in interest. People wanted to book trips and there were not enough people to answer the phone and answer questions.” As with seemingly every other industry, tour operators are being plagued by labor shortages and supply chain backups.

There is also a great disparity between the types of services that tour operators provide and the kinds of regions they service. Those with a domestic outdoor focus are obviously doing better than an operator that specialized in international study abroad, which has been totally shut down for the foreseeable future.

On the whole though, revenues are still down dramatically. the ATTA, in a survey of adventure tour operators found that 74% of respondents had seen a 80% or greater reduction of revenue in 2020 compared to 2019. And these are the outdoor operators that are supposed to be doing the best! Prather says that “our members are telling us… It won’t be until 2023 that we will really see a full recovery in terms of getting back to 2019 levels.”

And that’s a long way for a struggling tour operator to make it alone. Add in the investment required to digitize and the scale increasingly needed for effective distribution, and the hurdles become insurmountable for some. In that same ATTA survey, 15% of tour operators surveyed said they are possibly closing down, 3% are definitely shuttering. 28% surveyed were interested in being acquired by or merging with another company.

As bad as things have been for tour operators, we believe that we have yet to see the full wave of bankruptcies and consolidation to come in the multi-day tour industry.

Overall, we believe it is possible to look at how flights and accommodations were transformed in the wake of their digital revolutions in the early 2000s as a road map for the multi-day tour industry.

The flip side of the rise of digital marketing and online booking sites is that, as many an airline or hotel discovered, tour products will become increasingly commoditized. Both OTAs and Google search encourage suppliers to fit their tours into the neat boxes drawn up by online distributors. And comparison search engines necessarily require that the more unique aspects of a tour be minimized in favor of the more standardized feature sets like departure date, price, length, and destination.

Matt Berna, Managing Director, North America for Intrepid Travel told us that, “the reason I say that the price is becoming more important is some of these OTAs.” Berna clarified that, “we like to work with review sites like the TourRadars of the world where [the sort algorithm] goes by customer reviews… whereas [if] we go just to a platform that sells a price only, it’s going to be really, really competitive and it may not be worth the business for us.”

Commoditization, in which the main means of competition becomes price, is exactly what the rise of digital distribution did to airlines, hotels, and alternative accommodations. True, tours are more complex products, and therefore may never become quite as commoditized, but the direction of the trend is clear to us.

Using this as a benchmark, we see four broad paths forward for tour operators to follow in response to the rise of digital channels and online and the commoditization it will bring.

1) Embrace Commoditization : If you can’t beat ‘em, join ‘em, as the saying goes. Rather than try to fight it, some tour operators will choose to compete on price and make up for lower margins with volume. Call it the Walmart strategy.

Sometimes customers just want, “your bread and butter trips” says Berna. Berna explains that Intrepid works very hard to differentiate even these trips based on quality, but admits that, “once you get into that competitive set, we’re all selling the Inca trails… of course, the only way to really compete sometimes is the price.” Intrepid, as one of the largest tour operators in the world, has the scale necessary to run trips like this.

But very few other operators will be able to grow to the size necessary to win at this game. Expect only the largest operators in the world to pursue this strategy. That leads us directly into the next industry shift we expect to see.

2) The Big Get Bigger Through M&A: There’s safety in numbers, and more importantly, operating leverage. We discussed in the earlier online booking section how these sites have a scale advantage in performance digital marketing. The airlines and hotels both found the best way to compete was to consolidate to build this same marketing advantage for themselves. Call it the Marriott/Starwood strategy.

By consolidating, the biggest players broaden their supply choices which makes it easier to drive loyalty program customers who consistently book direct and have higher lifetime values, justifying higher upfront marketing acquisition costs. This makes large-scale businesses better able to compete with booking sites in performance marketing. Plus, with growing name recognition they can invest in brand marketing which drives new customers and makes performance spend more effective.

Consolidated suppliers also have more leverage to negotiate lower commissions with travel agents, both online and offline. Finally, with larger balance sheets comes the ability to control exclusive and/or scarce resources that can only be sold through exclusive first-party channels. By this we mean sources of unique supply like national park permits, private islands, or wholly owned hotels and resorts, which are very expensive to acquire or develop.

3) The Boutique Route: For many, competing on price and volume is a race to the bottom that only the biggest can win. Like with the boutique hotel movement, we think there is a great opportunity for tour operators to de-commoditize their product by providing very high service or specializing in a very specific niche.

The niche for these ‘boutique’ tour operators can be anything from a specific region, a type of tour (e.g., mountaineering or biking), an affinity group (e.g., photography or cooking) or a style of travel (e.g., train travel or sailing). But the key is that it needs to be something where the operator can be differentiated and best in class. By committing to a niche, it precludes growing to a large size, but it means that you can be the world leader in your particular area and attract direct bookings looking for this unique offering. Even better, because fewer other operators commit to any given niche there will be less competition and these boutique businesses can have stronger pricing power.

A good example of this is MT Sobek which has a 53 year pedigree in mountaineering and adventure travel that started in Nepal. Massimo Prioreschi, its CEO, told us that, “[adventure travel is] a tough business to scale… It’s hard to manufacture deep knowledge and excellence in guides.” He explains, “I’ve been at companies before that were very scale driven. And [MT Sobek] isn’t, it’s quality driven, it’s connection driven, it’s relationship driven. And that really, I think that’s why we’re still here.” Prioreschi has turned the slow process of grooming a mountain guide into a competitive moat for his business by embracing the boutique nature of their organization. As a result MT Sobek sees 90% direct traffic and 75% of their business comes from repeat guests or word of mouth.

4) Embrace The Complexity of B2B: In response to an increasingly competitive B2C market, some may drop it altogether and pursue the still largely offline B2B market. Coltur Peru , a local DMC is an example of this. As a result of COVID it reorganized to drop its lower-end consumer offerings. Now Coltur focuses largely on complex custom group tours and special interest itineraries.

“There’s this mass hysteria that everybody has to be with one foot in B2B and one foot in B2C and if you’re not in B2C, then you’re going to die,” says Coltur’s Chief Commercial Officer Enrique Velasco Jr. Dismissing this conventional wisdom, he says that the company is, “trying to focus in market segments that do need the middleman. That segment … might, as a percentage of the whole industry… become smaller. But it’s not going to die.” Velasco sees the challenges incumbent in planning a custom itinerary as a competitive moat, telling us, “the more complex what you’re looking for, the more we stand apart from our competition, that’s what we believe.”

This is akin to the strategies pursued by business travel agencies which, up until COVID-19 hit, had continued to grow by providing high-touch service to large organizations while leisure offline travel agencies shrunk in the face of D2C challengers. There is still a lot of value to be had in planning high-value and complex tours. The addressable market may be smaller than the mass-market D2C opportunity, but those that can successfully hang onto their slice of the pie will be rewarded with stable cash flows.

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Shopping cart items, understanding the supply chain of travel.

Even for industry veterans, it can be a confusing process to fully understand the supply chain of travel due to the many layers and different terminologies used. This can lead to confusion and a lack of understanding around the complexities within the industry, the cost of doing business, as well as the advantages and disadvantages of the various supplier layers. In addition, innovation, technology, and modernization are changing the travel supply chain model on a regular basis.

This article will explore the businesses involved in the supply chain, the different terminology used, and also how those terms vary based on where you do business around the globe. For simplicity's sake, here is a classic traditional model that is used often and starts with the traveling consumer.

In this example, the consumer works with a travel advisor, the travel advisor works with an outbound tour operator, the tour operator works with a Destination Management Company (DMC), and the DMC works with local suppliers (operators, accommodations, and transportation). Let’s explore those different layers and the terminologies and meanings of each.

The consumer travels to the destination and experiences the travel product. When a consumer books a trip “direct” with a local supplier or operator, they can skip through many of these intermediaries, which is also referred to as disintermediation. For example, the chain could look like one of these examples:

While booking direct is a growing trend in the travel industry, in adventure travel the consumer is often looking to experience more remote destinations and combine various locations and activities. As a result, there is still a greater need for an intermediary than in other tourism sectors. Post-pandemic, having a trusted partner to provide reassurance and protection is more important and valuable than ever before. Let's take a closer look at those intermediaries, and understand the value and benefit of each.

Travel Advisors

(Also known as Travel Agents or Travel Consultants)

The travel advisor is a curator of a personalized experience for a consumer. The travel advisor’s unique role is to understand the needs of their clients and to know the depths of the travel market so they can craft a travel solution that delivers on those needs. Consumers who value not having to spend hours looking for the perfect accommodation, consider how to get from point A to B to C, decide what destinations have the best option for their current activity requests, or research which options are more sustainable, gain great value and benefits from working with a travel advisor.

A travel advisor often charges a small fee to the consumer for their expertise, and they often receive commissions from businesses. For a tour operator, an advantage of working with travel advisors is that a curated traveler is brought to them; if the traveler has a good experience, the advisor or agent is likely to return with future clients. Often, travel advisors remain involved and handle client questions and support.

One of the greatest values of a travel advisor to a consumer is that in addition to hotels and transportation options, they are knowledgeable about and sell a wide variety of packaged trips from different tour operators, and therefore can provide a diverse range of options. International travel, in particular, can involve more unknowns and uncertainty, making travel advisors' expertise and experience particularly valuable.

Outbound Tour Operator

The outbound tour operator will craft ideal itineraries and sell those itineraries to individuals or groups as a packaged product. The tour operator's value is in knowing current market demand and travel trends and matching those with destinations to keep innovating new products. These are often multi-day itineraries–from three days to three weeks, depending on the destination and experience.

Tour operators are often specialized and cater to a niche market with specific needs, so travelers who book with them tend to be more loyal. This is especially true in adventure travel, where many operators specialize in activities such as trekking or cycling. Tour operators usually work with DMCs in a destination who help them identify the best local suppliers for their tour needs. A consumer who wants to go on a tour through an operator will sometimes also use a travel advisor because the travel advisor can identify the right tour operator for their needs and also add additional experiences before or after the tour.

It is also important to note that tour operators usually hold a legal responsibility or bond to safeguard the consumer, depending on the country in which they operate. This adds an extra layer of protection by requiring transparency, information sharing, cancellation rights, and assistance to travelers.

Destination Management Company (DMC)

(Also known as Wholesalers, Ground Handlers, Inbound Tour Operators)

A DMC is a company that sells and packages solutions within their destination. They have deep knowledge of and connections with accommodations, local transportation, and local suppliers who offer logistics and activity options. DMCs get rates from their suppliers for products which they then package and sell to operators, advisors, or even directly to the consumer. In each case, DMCs can be thought of as wholesalers or ground handlers in their destination.

DMCs work with outbound tour operators or cruise companies (specifically expedition cruise companies within adventure travel) to provide options that meet the tour needs. Travel advisors can also work directly with DMCs to provide a menu of activity options and on-the-ground support for clients if issues arise. However, it is important to note that not all travel advisors can work with DMCs due to variations in laws and business practices across different countries.

Local Suppliers

In the growing and ever-changing world of travel there are many businesses that offer services on the ground for travel experiences. These include varying levels and styles of accommodation, transportation, and activities such as kayaking, climbing, food tours, cultural experiences, and more. Local communities are an important part of the travel experience and DMCs’ relationships with and connections to these communities is important. Understanding the sustainability efforts of local suppliers is key as market trends show that 90% of consumers are asking for sustainable travel options.

Online Travel Agencies (OTAs) / Web-Based Marketplace

OTAs are best known for selling flights, hotels, and cars. However, many also sell packages, such as outbound tour itineraries or packaged tours from DMCs.

OTAs curate products from the DMC and directly connect the DMC with the consumer. The DMC is the one crafting the product and selling it to the consumer, while the OTA takes a commission for bringing the consumer to them. In this case the DMC must be able to sell directly to the consumer to be featured in the OTA’s platform. This is particularly true of tailor-made holidays which require a strong local expertise. The resulting supply chain in this example looks like this:

To further complicate matters, OTA can also stand for Online Tours & Activities (such as Viator, Get your Guide, Klook). These are web-based marketplaces that directly curate activities or experiences from the local activity providers and sell them to individual travelers.

Adventure Travel Terminology

At the Adventure Travel Trade Association (ATTA), we often use the term “supplier” when referring to DMCs and local suppliers and the term “buyer” for outbound tour operators and travel advisors.

“Buyers” are the ones directly connected with the consumer and who influence travelers’ destination and activity decisions. They 'buy' or source products and services from local DMCs in the destination.

“Suppliers” or DMCs in general are 'supplying' services from the ground and destination to the outbound market. Online Travel Agencies (OTA) and online wholesalers are also important players in the market.

Example of Global Differences and a Changing Marketplace

The global travel supply chain is a complex puzzle which is constantly changing in a disruptive world and varies depending in which country the company is based. For instance, in the United Kingdom, there is a clearly defined line between tour operators and travel agencies. Outbound tour operators contract directly with local DMCs, while travel agencies sell products from tour operators or UK-based businesses with a UK tourism license. In contrast, in France, travel agencies work directly with local DMCs as well as with outbound tour operators.

In Asia, travel advisors and outbound tour operators are often one and the same business, calling themselves a travel agent, but taking the role of packaging the trip themselves.

Increasingly more popular in the travel industry is the role of the marketing representative or ‘Sales Rep’ who is in charge of promoting and connecting DMCs with outbound tour operators (and possibly travel advisors). They are based in the targeted market destination and very well-connected. They can work on commission or retainer fees, depending on a country’s practices and agreement between the two parties.

An additional disruption in the market are media influencers who sell their own curated tours to their followers where they often lead the group. Since they have already built trust with their audience, their loyal followers are interested in traveling with them to destinations and experiencing travel through their lens and brand.

Special interest groups are another growing niche market, for example avid cyclists might organize an annual trip overseas for their group, where they might work directly with an outbound tour operator, DMC, or even the local suppliers themselves.

Building Relationships

Developing relationships across the complicated global travel supply chain is more important than ever, especially as destinations and businesses recover from the pandemic . New entrants to the market should ask clear questions when establishing their business relationships to ensure both parties understand their individual roles and expectations and maintain open communication throughout their partnership.

Which Type of Tour Operator are You?

Let’s be honest – the tour operator business is highly competitive as companies try to get a large share of the international and domestic markets they operate in. In order to better navigate the landscape, you need to understand where you stand in that market.

We all know that a tour operator is one who packages key components (or all) of a trip, markets it, sells it to a traveler or tourist, and handles the entire tour operation.

But do you know exactly which type of tour operator you are?

Having clarity on this question will help you identify key partners to work with (like DMOs or hotels) and make better business decisions overall. As a result, you’ll be able to curate better tour packages and run your entire tour operation smoothly, efficiently and successfully.

This is why we’ll cover the different types of tour operators below (plus – we’ve attached a handy infographic at the end for your reference).

So, let’s get to it – which type of tour operator are you?

Types of Tour Operators

There are five main categories of tour operators that you could fall into: inbound tour operators, outbound tour operators, domestic tour operators, receptive tour operators, and ground tour operators. Let’s find out which one of these five you fall into.

Of course any tour operator cannot be fully successful without a booking system that will automate all reservation processes and allow them to generate more revenues. If you still haven’t got a booking system, try Regiondo , the most popular booking system in Europe designed to streamline your booking process. Book a demo with Regiondo experts to learn how your business can leverage booking system.

Inbound Tour Operators (AKA Incoming Tour Operators)

Inbound tour operators bring tourists into a country as a group or via individual tour packages. They handle all arrangements in the host country; and the types of tours they curate are specifically for non-residents touring the country.

Let’s look at an example.

If a group of Italian tourists want to explore Germany, then the tour operator in Germany who handles all the arrangements for the tour is known as an inbound tour operator. So, inbound tour operators are locally based and offer tours that cover their own country.

Most inbound tour operators hire local travel agencies for things like airport pick-up and drop-off; form partnerships with local hotels and businesses; and have key partnerships with other types of tour operators (who help them run tours on the ground).

Outbound Tour Operators

Unlike inbound tour operators, outbound tour operators work within their countries to take travelers to other countries. They are tour operators who market their tours for international destinations, either for business or leisure travel.

Let’s say, for example, that a group of Canadian tourists are planning a trip to Italy. Then the tour company in Canada that handles all the ticket reservations and hotel bookings is the outbound tour operator.

To further simplify things, outbound tour operators design and package tours for tourists in their home country to visit an international destination.

Now, most outbound tour operators choose to specialize in specific destinations: either a destination that is “trending” or one in which they have particular expertise and distribution partners. They often work with other tour and activity providers in the destination when designing their travel packages.

Domestic Tour Operators

Domestic tour operators are those that put together inclusive tour packages and sell them to domestic travelers. In other words, they are tour operators who provide travel packages and tours within a tourist’s native country.

Domestic tours usually involve residents of a specific country traveling within that country. They can visit national parks, scenic areas, hospitality tours, city tours , train tours, etc. Since there are many options that tourists can choose from, domestic tour operators often combine several tourist components into an inclusive package that they can sell to travelers within the boundary of the country.

Domestic tour operators form key partnerships with other tour and activity providers in order to attain a larger share of the domestic tourism market.

Receptive Tour Operators (RTOs)

Receptive Tour Operators (RTOs) provide tourism products to tour operators in other markets (as a business-to-business relationship).

Specifically, RTOs sell tourism products, whether they are sold in a tour package or alone, to tour operators and/or travel agents . They are essentially wholesalers and they don’t sell directly to the public.

So how do they make money?

They add a percentage rate (or fee) to the final price that the tour operator is selling the product or service for. When a travel agent buys the tour product, they incur the RTO’s fee in the final price. In that sense, RTOs do not charge commission. They simply market the tourism product and add their fee to the final product price.

Another key characteristic of RTOs is that they are experts in the region they operate in; and know much more than just the hotels and types of tourism activities that are offered in the region. As such, RTOs to help other tour operators identify things like hotels, services and design itineraries in regions they are not familiar with.

Ground Tour Operators

Ground tour operators operate domestically. They are however different from domestic tour operators in that they organize tours for incoming tourists on behalf of an inbound tour operator (and sometimes, outbound tour operators).

Let’s look at an example to better understand the role they play.

Italy will be the destination in this example. So, here’s how it works:

An inbound tour operator designs and promotes beach holidays, adventure, and heritage tours in different parts of Italy. Problem: the inbound tour operator doesn’t have offices across Italy. The inbound tour operator also doesn’t have close contacts or partnerships with suppliers and key agents in certain parts of the country. So, they consult with ground tour operators.

It is the ground operator that will handle the incoming tourists at those various destinations around Italy. They oversee land arrangements; negotiate with and contract local vendors; coordinate arrivals and departures; plan and put together local tour packages; escort tourists; provide market data; and cost and price tour packages. Overall, it is their duty to ensure that the entire trip goes smoothly based on the package tours and agreements.

You may know ground tour operators as “handling agencies” because they organize tours for incoming tourists on behalf of overseas tour operators.

Wrapping Up

Back to the question we asked at the very beginning: which type of tour operator are you? Now that you’re better informed to answer that question, you can also start thinking about ways to improve your distribution and marketing channels based on that answer.

The next step is to figure out who your key partners are and strike up deals to propel your business forward.

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Outbound Vs Inbound Tour Operators

For Tour Operators, deciding which type of tours to offer and which market to specialise in can be a difficult task.

Despite the huge impact of the COVID-19 pandemic on travel, with the global industry having lost $4.5 trillion in 2020, tourism is now experiencing a revival as international borders begin to reopen.

Now is the perfect time to take advantage of the increased demand for travel and improve your business strategy.

Whether you’re looking to diversify your offerings, move into a new market or are just starting out in the industry, we are here to give you some useful advice that will help you to find the best option for your company.

Which Type of Tour Operator Are You?

Before you begin to market and sell your tours, it is important to determine which type of tour operator you are in order to develop an effective strategy, find out who your potential customers are and stand out against competitors.

To help you navigate the market, we are going to explain the key characteristics of two types of tour operators: inbound and outbound.

What is an Inbound Tour Operator?

Sometimes referred to as destination management companies, inbound tour operators are locally-based companies who work by bringing visitors into a specific country or destination, often partnering with other businesses such as accommodation and transport providers in order to offer customers package deals.

As opposed to domestic tour operators, who cater to the needs of travellers in their native country, inbound travel companies focus on non-residents and aim to promote their destination as a whole.

What is an Outbound Tour Operator?

While inbound tour operators bring tourists into a country, outbound tour operators market to travellers in their own country and offer tours in international destinations .

When creating tour packages, outbound tour operators usually focus on specific countries, destinations or regions of the world, and also partner with businesses in the host country to provide customers with convenient and comprehensive packages.

What is the Difference Between Inbound and Outbound Tour Operators?

You might still be wondering, what is the difference between inbound and outbound tour operators?

Although there are many similarities between the two, the main difference between inbound and outbound tour operators is whether they offer tours within their own country or in international destinations .

Both types of businesses can provide specialised tours or focus on the mass market, and whichever segment you choose to cater to, it is crucial to utilise the power of marketing.

In our recent blog post, the tour operators’ guide to creating an exciting marketing strategy , we explain the ways in which you can upgrade your marketing strategy and entice and retain customers.

Advantages and Disadvantages

Before deciding which market you choose to operate in, there are many advantages as well as some disadvantages that you should first consider.

Inbound tour operators have the advantage of being based in the same location that they offer tours in, meaning that they are likely to have a deeper knowledge of the local area, culture and language in comparison with outbound tour operators, and they may also have already developed relationships with local companies and tour guides.

Inbound tour operators can also benefit from having direct contact with customers in their destination of choice, allowing them to offer a more personalised experience.

On the other hand, outbound tour operators deal with customers from their own country, which can make it easier to understand their needs and create tour packages accordingly. However, not being based in the destination itself could make it more difficult to resolve any problems that might come up.

Another huge advantage that outbound tour operators have is the ability to change their offerings based on the latest travel trends and demands. The travel industry is highly competitive and dynamic, and offering outbound tours can allow you to rapidly adapt to changes in the market.

Takeaways for Tour Operators

Whether you are an inbound or outbound tour operator, it is crucial to create an exciting marketing strategy and have a deep knowledge of your chosen market and potential customers.

Here at Nezasa , we work with both inbound and outbound tour operators to assist them in creating the most seamless planning, booking and post-booking process for their clients.

For the latest travel related content and more information about our bleeding-edge software, be sure to keep up with our blog and register for our next webinar.

Tour Operators: Types, Functions, Importance, Difference

Post last modified: 19 January 2023
Reading time: 18 mins read
Post category: Uncategorized

What is Tour Operator?

Tour operators are sometimes called wholesalers but this is partially true because a wholesaler buys goods or services in bulk at his own account to prepare a tour package and then retails it through the travel agencies or directly to the clients.

Table of Content

1 What is Tour Operator?
2.1 Inbound Tour Operators
2.2 Outbound Tour Operators
2.3 Domestic Tour Operators
2.4 Destination Management Companies
3.1 Planning a Tour
3.2 Making Tour Package
3.3 Arranging a Tour
3.4 Travel Information
3.5 Reservation
3.6 Travel Management
3.7 Evaluate the Option Available
3.8 Promotion
3.9 Sales and Marketing
3.10 Taking Care of Glitch
4 Importance of Tour Operators
5.1 Tour Packages Creation
5.2 Make Travel Arrangements in Advance
5.3 Tour Operations Budgeting
5.4 Providing a Relaxed and Safe Tour
6 Difference between Travel Agent and Tour Operator

However, a tour operator who has his own one or more tourist product components formulates a new tourist product for example ‘inclusive tours’. Tour Operators generally offer a variety of package tours to cater to the needs of different kinds of travellers.

An organization, firm or company which buys individual travel components, separately from their suppliers and combines them into a package tour, which is sold with their own price tag to the public directly or through middlemen is called a tour operator.

More precisely, tour operators are mainly responsible for delivering and performing the services specified in a given package tour. They can provide these services themselves as some have their own cars and coaches, hotels and other travel-related services or can obtain these from other suppliers. That is why they are called manufacturers of tourism products.

Types of Tour Operators

Following are the types of tour operators explained briefly:

Inbound Tour Operators

Outbound tour operators, domestic tour operators, destination management companies.

These are also known as incoming tour operators. Technically, the operators who receive guests, clients/tourists, and handle arrangements in the host country are called inbound tour operators.

For example, a group of American tourists coming through TCI to India and the company makes arrangements and handles the group in India, then TCI is called an inbound tour operator. Incidentally, the inbound traffic to the country for the last two decades has been decreasing.

Essentially, tour operators need to adopt innovative marketing strategies and should introduce special interest tours to cater to the special needs of foreign tourists.

Tour operators, who promote tours to foreign destinations, maybe business tours or leisure tours are called outbound tour operators. Indian outbound tourist traffic is growing at a rate of 10 percent annually and this makes India the second-largest country in the world with regard to the travelling population.

However, India’s outbound tourism is not only holiday-oriented but it is business-oriented too. There are many travel companies that offer outbound packages such as SITA, TCI, Thomas Cook etc.

Domestic tour operators are those who assemble and combine tourist components into inclusive tours and sell them to domestic travellers. In general, these tour operators provide travel services within the boundary of the home country and offer package tours to travellers viz. domestic inclusive tours or independent tours.

These are commonly known as handling agencies and their main function is to organize tour arrangements for incoming tourists on behalf of overseas operators. When a tour operator himself promotes beach holidays, wildlife holidays, wildlife tours, heritage tours, cultural tours at different places, difficulty arises.

It is the ground operator who handles the incoming travellers in the same season but at different places and ensures that the entire operation is according to the package tours or agreements.

Sometimes when a handling agency is at a prominent tourist place, for example, Delhi and it has to make arrangements to Goa, then it contracts (if it has no office of its own) with a local operator (known as an excursion agent) to handle the arrangements on his behalf.

Functions of Tour Operator

A tour operator is like a service provider, providing the most convenient option for tourists to stay, visit, as well as leave the city. A tour operator owns a high volume of travel services across carriers, services, and accommodation. Some most important functions of the tour operators are following:

Planning a Tour

Making tour package, arranging a tour, travel information, reservation, travel management, evaluate the option available, sales and marketing, taking care of glitch.

The most important function of the tour operators is planning a tour. Tour operators plan a tour and make a tour itinerary that contains the identification of the origin, destination and all the stopping point in a traveller’s tour.

A prospective tour operator also gives advice to intending tourists in various types of tour programmes, which they may choose for their leisure or commercial travel.

Tour operator buys individual travel components, separately from their suppliers and combine them into a package tour. Tour operators make tour package by assembling various travel components into a final product that is called a tour package which is sold to tourists with their own price tag. Making tour packages is also an important function of the tour Operator.

Tour operators make tour package and also arrange a tour according to tourist demands. Tour operators arrange the tour package and various tourists activities to provide the best experience to tourists/travellers.

Whatever the size of tour operators, it has provided necessary travel information to the tourists. This task is utterly difficult and very complicated. A tour operator must give up-to-date, accurate and timely information regarding destinations, modes of travel, accommodation, sightseeing, immigration, health and security rules about various permits required to travel in a particular area etc.

It is a very important function of all types of tour operators and travel agencies. Tour operators make all the reservations by making linkages with the accommodation sector, transport sector and other entertainment organizations to reserve rooms, and seats in cultural programmes and transportation.

Tour operators manage tours from the beginning to the end of the tour. A tour operator has the responsibility to look after the finer details of a vacation or tour such as hotel, accommodation, meals, conveyance etc. Tour operators provide travel guides, and escorting services and arrange all travel-related needs and wants.

Tour operators evaluate all available options to provide a unique or unforgettable travel experience to tourists during their journey. Tour operators evaluate the various options available for a tour package and provide the best of them to tourists.

Tour Operators makes tour packages and promote them into various tourists markets at domestic as well international level. Tour operators promote a travel destination to attract a large group of tourists at the domestic as well as international level.

In the promotion of tourist destinations, tour operators play a key role. Travel agencies or tour operators are called image builders of a country.

Tour operators do sales and marketing of tourist products. Tour operators buy individual travel components, separately and combine them into a tour package, which is sold with their own price tag to the public directly. Tour operators do the marketing of tourist destinations and tourism products to attract the attention of tourists/travellers.

Tours operators are also called handling agencies that handle tour package and take care of all the glitches and problems that arise during a tour package. Tour operators fix the glitches and provide the best available alternative to tourists during their journey.

Importance of Tour Operators

Tours operators play a key role in the tourism sector. Tour operators create tourist product, promote them and finally sold them to tourist.
Tour operators provide the best and competitive price to the tourist. Tour operators negotiate with suppliers of tourism product such as hotels, airlines and provide the best possible price to the tourist.
Tour operators buy tourist product in bulk and get huge discounts from suppliers. So that they can provide tourist’s products at cheap price.
Tour operators organized a tour in the best way. They personalize and make sure each and every component of the tour is well-taken care. Tour operators provide best travel experience during a tour. Tour operators save tourist’s times and money.
Tour operators provide immediate support system at host country as well as foreign land. When tourists travel to a foreign land and things get uncertain, maybe it’s a health or loss of documents and need to return back or change of travel plan. A qualified tour operator takes care of all these unseen events with efficiency.
Tour operator caters to the needs of tourists on the based on their taste of travel. Tour operator provides all the best available option according to tourist needs and demands.

Role of Tour Operators in Tourism Business

Tour packages creation.

The tour operator is in charge of developing and maintaining guests’ tour packages. The preparation of activities that appeal to the specific visitors embarking on the trip is part of tour package management. When and how to adjust a tour package to best adhere to the group or individual’s goals should be covered by the tour operator.

Make Travel Arrangements in Advance

In most circumstances, tour operators are responsible for making travel arrangements for the touring group. This covers transportation from one location to another, as well as ensuring that all members of the group arrive at their next destination. Tour operators frequently assist with flight tickets and collaborate closely with hotels to recommend lodging reservations, sightseeing alternatives, and other activities to group members.

Tour Operations Budgeting

Tour operators work hard to build tour packages that provide users with great service at a lower cost than if they booked each commodity separately, while still running a profitable business. Tourists purposefully seek out the assistance of a travel agent or tour operator in order to get more value for their money. Before finalising a tour package, tour operators should take the time to evaluate pricing.

Providing a Relaxed and Safe Tour

A tour should fulfil all of a traveller’s expectations and beyond. A tour operator should be skilled at putting together an experience that will leave guests with lifelong memories.

It’s just as crucial to providing a meaningful, good experience as it is to keep your passengers safe throughout the journey. Some tour activities may represent a possible risk to travellers, putting the tour organisation at risk. As a tour operator, you should encourage your visitors to purchase travel insurance. Insurance will give you and the tourists peace of mind as they go on once–in–a–lifetime experiences. Travel Agency & Tour Operators Roles & Responsibilities

Difference between Travel Agent and Tour Operator

There is a lot of confusion about the difference between tour operators and travel agents what exactly makes them different. The main difference between a Travel agent and a Tour operator are following as:

A travel agent is a person who has a full knowledge of tourist product – destinations, modes oftravel, climate, accommodation and other areas of the service sector. He acts on the behalf ofthe product providers/principals and in return get a commission.
Tour operator is an organization, firm or company who buys individual travel components,separately from their suppliers and combines them into a package tour, which is sold withtheir own price tag to the public directly or through middlemen.
Tour operators are like wholesalers and travel agents are the retailers.
A tour operator makes the package holidays up and the travel agents sell them on.
Tour operator taking up the bulk of the responsibilities and his fee is obviously much greaterthan a travel agent.
A tour operator has the responsibilities to look after the finer details of a vacation or tour suchas hotel, accommodation, meals, conveyance etc.

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The role of tour operators wholesalers and travel agents

2.4 the travel sector, 2.4.1 the role of tour operators wholesalers and travel agents.

Travel agents, tour operators and wholesalers are distinct sectors of tourism (King and Hyde, 1989, p. 41). The terms “tour operator” and “wholesaler” are often used interchangeably. However, Howard and Harris (2001) argue that in tourism industry jargon, the two denote different types of businesses.

Tour wholesalers

A tour wholesaler is defined as a firm that purchases travel and tourism services in bulk and combines two or more of these services into a ‘package of travel’, often called a tour for sale through travel agencies or direct to consumers (King & Hyde, 1989; Howard & Harris, 2001). These services include airline seats, car rental, hotel rooms, sight seeing tours etc.

Tour wholesalers play a prominent role in the tourism industry by developing package tours, which normally include viable destinations and combinations of attractions, accommodation and transport (Dickman 1989, p. 144). They have a responsibility of ‘selecting’ and

‘combining’ services in a manner that would appeal to a target market. Packages provided by these tour wholesalers therefore vary considerably depending on the number and nature of ingredients included. Howard and Harris (2001, p. 359) argue that by providing ‘ready made’ travel and tourism packages “tour wholesalers make it easier for individuals, or groups, to travel to and experience other areas or countries.” They also secure substantial price discounts by buying in bulk from different service providers and then design a brochure to promote the package and distribute it for sale either through travel agencies or to consumers.

Tour wholesalers do not usually own the services they package. However, evidence exists to the effect that some companies employ their own tour escorts or managers rather than purchasing these services from specialist companies or individuals (Howard & Harris, 2001). Through forward integration, some airlines, particularly QANTAS, Jetstar and the now defunct Ansett operated wholesaling and travel agents divisions as a way of increasing the sales of their seats (King & Hyde, 1989; Howard & Harris, 2001). For example,

QANTAS runs its wholesaling division QANTAS Holidays while Ansett used to own Traveland, one of Australia’s biggest travel agents chains. In Australia tour operators such as Jetset, Thomas Cook and Express also act as travel agents, prepared to book their own or other tours for a customer. Traditionally they have been classified as domestic, inbound and outbound tour operators.

Tour operators

A tour operator is a “company or individual that provides tours within a particular destination area. These tours can range from simple sightseeing journeys (e.g. harbour cruises) to extensive journeys of many weeks” (Harris & Howard, 1996, p. 153).

There are two broad types of tour operators, namely Local tour operators and Inbound tour operators. Local tour operators are tour operators that conduct tours within a particular destination and are located primarily in a traveller’s or tourist’s destination region. Howard and Harris (2001) argue that these operators’ services might also be used while en route to these areas by inbound tourists. Howard and Harris (2001, p. 361) further observe that while most local tour operators sell directly to consumers as well as through travel agents, many of them also “seek to have their services incorporated into the packages out together by tour wholesalers and inbound tour operators. In acting this way they are able to greatly increase their ability to sell their services to interstate and overseas travellers.”

Inbound tour operators are organisations, which arrange and oversee tour packages bought by inbound tourists to Australia. They do not only put together packages of services for use in a destination area by overseas travellers but also coordinate travel arrangements in Australia for overseas wholesale tour operators and retail travel agents. Their services include planning an itinerary in Australia, operating the tour, costing the tour components - including transfer, accommodation, sight-seeing, domestic transport, airport transfers, entertainment and meals (Stirling, 1993). Howard and Harris (2001) observe that service packages developed by Inbound tour operators in Australia are not sold directly to overseas

travellers but are purchased by tour wholesalers, travel agents and incentive houses located in the traveller’s home country who in tern would incorporate the packages into their own product offerings which they would then sell directly or via travel agencies, to consumers.

Travel agents

Travel agencies are intermediaries between principals (airlines, coach companies, hotel, vehicle, rental firm, tour wholesalers and cruise lines) and consumers (tourists). Travel agents evolved from pioneer travel agents such as Stewart Moffat Travel in Melbourne and World Travel Headquarters in Sydney in the 1950s even though there were a handful of agencies set up just to handle travel much earlier (Richardson, 1999). These pioneers were both wholesalers, retailers and inbound operators at the same time, and “…as time went on and markets became bigger, specialists developed either as separate companies or as subsidiaries or divisions of large ones” (Richardson, 1999, p. 252). Travel agents became more important when air travel increased popularity. Airlines viewed the use of travel agencies as a cheap and effective method of widening their distribution network in order to reach new and expanding markets (Vasudavan & Standing, 1999, p. 214). Furthermore, as more people travelled greater distances it became essential to have someone who knew about overseas destinations and regulations which became important to the overseas traveller (Dickman, 1989, p. 140). This led to the use of travel agents as brokers between tourism industry operators (principals) and consumers. Howard and Harris (2001, p. 24-26) argue that travel agencies in Australia can be grouped into four types, namely independent travel agencies, corporate chains, franchise agencies, and corporate buying groups.

Travel agents act not only to assist principals to distribute their services to those people who wish to purchase them (Howard & Harris, 2001), but also provide information, promotion and booking service to the market place (Stirling, 1993) in return for a commission “which is generally expressed as a percentage of the sale price of the travel product” (Howard &

Harris, 2001, p. 18). They also offer their clients a range of consulting services, including advice on travel services to purchase, and assisting clients in organising their trips. French et

al. (2000, p. 75) see agents as assuming a dual role. The first role being contractual between the agent and the principal 8 and the second being responsibility to the client in offering a service 9 .

Leiper (2003) sees travel agents as performing a number of responsibilities to their clients:

motivating sales prospects, informing consumers, making and confirming reservations, selling, planning clients’ trips, organising clients’ trips and supporting the management of clients’ trips; and principals: representing principals, selling and other promotional roles for principals, collecting information on booking, providing financial services and gathering market data. They also play an important intermediary role in the Australian tourism system. Given this duality of roles, Howard and Harris (2001, p. 18) argue that travel agencies are best defined as intermediary firms that derive financial gain (in the form of commission) by linking suppliers of tourism services with consumers through the provision of reservation, ticketing and other services.

The tourism industry
The impact of tourism in Australia
The role of tour operators wholesalers and travel agents (You are here)
Internal drivers
Types of strategic alliances

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Royal vacation co. ltd, our mission.

Royal Vacation is a Leading Tour Operator in Thailand. “Travel as Royal”. We believe that the key of Success in the travel industry is by providing professional services to exceed our clients’ expectations as priority. In addition, We do our Best to building trust and long lasting relationships with our Partners by selling based on integrity, consistency and reliability of products at very competitive market prices.

Quality begets quality. However, this is the credo that we have adopted for planning, designing and Executing all of our Products and Services. Quality is our key of Success, and we believe that the People make the Difference; that’s why our most valuable asset is our Professional trained Staff. Our Royal Vacation touch emphasizes personalized services and a focus on nurturing long-term relations. The motto of the company emphasizes of providing quality standard and superior personalized services Supervised by a professional management. Innovative concepts and a global outlook are ultimately the hallmarks of Royal Vacation Co., Ltd.

We are Specialized in Thailand Tours , Tailor made holidays and day tours in the major touristic destinations.

We Believe People Make the Difference

About Royal Vacation

Royal Vacation is based in Bangkok, Thailand . An accredited Inbound & Outbound Tour Operator. Inbound Operating nationally covering All the destinations in Thailand Such as Bangkok, Phuket, Krabi, Khao Lak, Pattaya, Chiang Mai, Koh Samui, Ayutthaya… etc. Market Cover: Middle East, Italy, Australia and Asia. Outbound Wholesale Tour Operator (B2B) Selling Australia – New Zealand, India, Egypt, Jordan and the Middle East.

The company is fully licensed Categorized as Grade A and a member of the Tourism Authority of Thailand (TAT) No. 11/08250 and official member in Association of Thai Travel Agents (ATTA), Thai Travel Agents Association (TTAA), and The Association of Domestic Travel. In addition, Royal Vacation has an accredited approval by Tourism Authority of Thailand as a leading inbound tour Operator in the year of 2012 & 2015 which is equivalent to Destination Approved Status.

Management , Royal Vacation was Founded in 2000 by Managers experienced for more than 25 Years in the travel and Tourism industry. The company Started from Sydney, Australia and Expanded to Bangkok, Thailand which is currently now the Head Office, The company continues Keeping the Australian High Standard of Service Background while applying any Kind of travel services.

We Don't just sell tours, We create memories

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We Customize Itineraries For Our Clients Based on their Needs and Preferences & We Suggest & Recommend the Best to Explore based on these preferences.

We are the Travel Experts that You Can Trust in Thailand with more than 20 Years of Experience. We Will Show you The Best of Thailand better than anyone else.

Our Itineraries and Programs are Exceptional and Designed by Destinations’ Experts in Thailand, and handcrafted in Style by the Agency’s Management.

We have Been Awarded and recognized by International and Local Organizations for the Exceptional Service that we provide to our Customers.

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COMMENTS

The Ultimate Guide to working with Tour Wholesalers and ...
A Tour Wholesaler creates packages by combining multiple activities, most likely, transportation and other services, and sells them via a sales channel. A Tour Operator is an organization or a firm that combines components from different travel suppliers and sells directly to the public. ... An Outbound Tour Operator or Outgoing Tour Operator ...
Outbound vs Inbound Tour Operator Agents
Outbound tour operator agents. A typical outbound tour operator works with international tourists. In contrast to inbound tour operators, outbound tour operators take travelers overseas from their home country. They offer a variety of tour packages that enable tourists across borders to travel abroad easily. Outbound tour operators contribute ...
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Working with tour wholesalers: 9 tips for tour operators. Updated April 2023 - Expanding your distribution network and improving your online distribution strategy can greatly benefit both outbound and inbound tour operators, but it's key to remember that success in the travel industry is not solely based on the quality of your product.
What is the difference between a tour operator and a tour wholesaler?
Often used interchangeably, the terms tour operator and tour wholesaler are different. The operator sells packages directly to the public while the wholesaler sells the package through a retail travel agent. Over 90 per cent of tours sold by independent wholesalers involves air travel. Read more. There is no definitive answer to this question ...
What is the Tour Wholesaler in Travel?
A tour wholesaler, also known as a tour operator wholesaler or travel wholesaler, is a company that acts as an intermediary between travel agents and tour operators, facilitating the sale of travel products and packages in bulk. These wholesalers purchase travel services and packages in large quantities from various suppliers such as airlines ...
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Well - once a relationship is established, some larger outbound operators can send 10, 20, 30, 50 or even 100 groups a year. What could start as a single $25,000 once-off relationship, can - and does - turn into $250,000, $2.5 million.. Or even more.
Tour Operators & Wholesalers
Often, the tour operator functions as a wholesaler, and they buy travel products in bulk at discounted rates and sell them as packages. Some tour operators even own airlines or hotels. Depending on the business model, they may fall into different categories such as outbound, inbound, domestic, or ground tour operators.
TourConnect
TourConnect allows you to connect online with existing partners, find new partners, and exchange rates, all in one place. We serve traditional distribution organizations - such as tourism suppliers, inbound tour operators, outbound wholesalers, retail travel agents, and every variation in between. We're on a mission to create a more ...
2021 Multi-Day Tour Operators: Reshaping and Distribution
In our previous section on the tour operator value chain, we discussed the difference between local wholesale tour operators and outbound retail tour operators. In the past these two businesses had a mutually beneficial relationship. Running dozens of local operations was impractical for the retailer while for a local operator, in Morocco say ...
Tourplan
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Understanding the Supply Chain of Travel
About Us. Established in 1990, the Adventure Travel Trade Association is the largest global network of adventure travel leaders. Our community is made up of ~30,000 individual guides, tour operators, lodges, travel advisors, tourism boards, destination marketing and management organizations, outdoor educators, gear companies and travel media who share a belief and commitment to sustainable ...
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There are five main categories of tour operators that you could fall into: inbound tour operators, outbound tour operators, domestic tour operators, receptive tour operators, and ground tour operators. Let's find out which one of these five you fall into. Of course any tour operator cannot be fully successful without a booking system that ...
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For Tour Operators, deciding which type of tours to offer and which market to specialise in can be a difficult task. Despite the huge impact of the COVID-19 pandemic on travel, with the global industry having lost $4.5 trillion in 2020, tourism is now experiencing a revival as international borders begin to reopen.. Now is the perfect time to take advantage of the increased demand for travel ...
Tour Operators: Types, Functions, Importance, Difference
4 Importance of Tour Operators. 5 Role of Tour Operators in Tourism Business. 5.1 Tour Packages Creation. 5.2 Make Travel Arrangements in Advance. 5.3 Tour Operations Budgeting. 5.4 Providing a Relaxed and Safe Tour. 6 Difference between Travel Agent and Tour Operator. However, a tour operator who has his own one or more tourist product ...
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Browse through 16 Wholesaler in the outbound tour operator industry on Europages, a B2B platform for finding worldwide partners.
Council of Australian Tour Operators (CATO)
CATO is the peak travel industry body exclusively representing the domestic and outbound land-supply sector of the Australian travel industry.. Full Members are CATO Accredited tour operators and wholesalers that sign up to our member code of conduct, ensuring integrity in advertising and delivery of high quality travel experiences.. CATO Associate Members consist of tourist offices and travel ...
The role of tour operators wholesalers and travel agents
Tour wholesalers. A tour wholesaler is defined as a firm that purchases travel and tourism services in bulk and combines two or more of these services into a 'package of travel', often called a tour for sale through travel agencies or direct to consumers (King & Hyde, 1989; Howard & Harris, 2001). These services include airline seats, car ...
ISCtravel
We complete range of travel services since 1991! We specialize in: processing visa support documents, discount hotel reservations, local transportation, standard and customized tour programs, unique travel itineraries, organizing large scale events such as convention, incentive travel, seminars and trade shows.
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Outbound Wholesale Tour Operator (B2B) Selling Australia - New Zealand, India, Egypt, Jordan and the Middle East. The company is fully licensed Categorized as Grade A and a member of the Tourism Authority of Thailand (TAT) No. 11/08250 and official member in Association of Thai Travel Agents (ATTA), Thai Travel Agents Association (TTAA), and ...
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