Understanding the various players within the group travel buyer ecosystem will help you develop a more targeted group sales strategy.
The group travel market is constantly evolving. To enjoy success it’s important for suppliers to understand and adjust to those changes.
Traditionally, wholesalers and receptive operators sold to tour operators. Those tour operators sold to group leaders and/or seat-by-seat. With the advent of special interest groups or affinity segments, the market has expanded. Now more than ever, suppliers have new opportunities to package and market their product.
We’re seeing more narrowly focused affinity tours such as those with a particular hobby or passion including outdoor, photography, wine and culinary enthusiasts. Operators are adjusting to smaller groups that display a more vertical interest. You should be doing the same.
Let’s review the four types of players in the packaged travel industry.
Tour Operators vs. Charter Bus Companies: Know the Difference
Before diving in, there’s an important distinction to make. Independent tour operators create tour packages for retail and/or group consumers — they do not necessarily own buses. Charter bus companies provide coaches and drivers to independent operators and group leaders for packages created by these customers. They do not offer packages. Some charter bus companies also have tour divisions, but the two don’t go hand-in-hand.
Receptive Operators and Destination Management Companies (DMCs)
An inbound receptive operator or DMC markets, books and services complete packages for a given destination. There are advantages to working with them. There is reasonable access to these area experts and, other than direct sales, little additional marketing is required. A receptive has access to and works with many tour operators and group leaders, which augurs well for repeat business.
In addition to their small numbers and most being located in major destinations, there are disadvantages to working with a receptive. They have no end user or consumer access and rely totally on others’ marketing and sales skills. A receptive is very price-sensitive and requires your absolute net (Never Ever Tell) price. Do your research. Is your receptive an established business? Did your colleagues have a good experience working with them?
Wholesalers
In the tour & travel industry, wholesalers tend to buy travel products and services in bulk and package the accommodations, activities and meals into a tour product to be sold to tour operators and group leaders. The distinct advantages are wholesalers have access to a wide variety of tour operators and group leaders. Their itineraries are well planned and maybe adjustable to a customer’s special needs. Buying in bulk certainly provides a price point that a customer can mark-up and still be competitive.
There are disadvantages as well. The bulk rates for a supplier may be too low for hotels and restaurants that are seasonal. Unless there is tiered pricing, tour operators are not favorable to wholesalers offering the same rate to group leaders. Once known primarily for budget tours, wholesalers today are offering creative itinerary experiences. Overall, wholesalers are an important part of the tour & travel segment. DMOs and suppliers should take notice.
Tour Operators
Over the years, tour operators have accounted for the bulk of the traditional packaged tour business. Tour companies provide and market multiple-destination packaged travels. As our nation’s “Greatest Generation” retired and hungered to see their country, packaged travel offered by tour operators exploded. According to the Statista Research Department, there were 5,179 businesses in the tour operator sector in a recent study, up from 4,638 prior to COVID-19 travel restrictions. Those operators are adapting to the change in consumer demographics. Where the traditional traveler wanted to see the manatees, today’s customer wants to swim with them. Special interest groups and experiential tourism are driving the industry.
The professional operator has a keen awareness of the competitive market. Their distribution network is wide, consisting of consumers, group leaders and travel agents (many travel agencies also have tour divisions). That translates to an opportunity for repeat business, or even a series of tours over consecutive years. Access is relatively easy through marketplaces, travel exchanges, trade magazines and e-newsletters. It’s easier to qualify tour operators. Do they attend marketplaces? Are they members of a professional organization? Do they have a modern website?
Although there is ease of access, tour operators are creatures of habit, having built trust with their existing suppliers. They do not like to be sold and are price-sensitive.
Group Leaders: A Diverse and Growing Market
Under the umbrella of group leaders you’ll find a diverse market. From garden clubs to bank clubs, churches to chambers of commerce, senior centers to ski clubs, we’re all part of some special interest or affinity group. Think of the clubs and organizations you, your friends and extended families are involved with — these are pre-formed groups that may or may not have an organized group travel component.
There are two types of group leaders you should know:
- There is the group leader of an organization who functions as an agent of the professional tour company. They promote that operator’s packaged travel to their group and are compensated with a commission, per-head fee or free travel.
- Some group leaders represent large groups and even multiple groups. Generally speaking, the majority of group leaders plan their own day trips, but when it comes to extended or overseas travel, they solicit the help of a tour operator. The golden rule: the more complicated the trip, the more likely they are to use a tour operator.
On the surface, the advantages of working directly with group leaders seems compelling. As a supplier, you have direct access to the group and you’re dealing directly with the decision maker. They control the passengers and have a good feel for the end user. It’s also the quickest turnaround from sales contact to visit. While tour operators book up to two years in advance, group leaders can turn around a trip in 90 days or less if they have motivated travelers.
Does it sound too good to be true? Weigh the disadvantages of selling to group leaders. Although large in number, they are difficult to identify by name and any company’s group leader list is considered proprietary data, so access is limited. This translates to expensive access. Group leaders may also be questionable repeaters — they will visit a destination once and then move on to the next trip.
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