It’s been a good few years for tour operators. Studies show that tour revenue in the US has increased or been steady since 2009. Meanwhile, global international tourism revenue has risen every year since.
But what’s behind this trend? To what can we attribute the industry’s growth? The answer is a combination of factors that, when combined, create an ideal environment for an upsurge.
Let’s take a look.
Over the past decade, digital media has become an indispensable part of the tourism industry. With each passing year consumers rely on the web a little more, and this has led to an uptick in online travel sales in the US and even greater growth in emerging markets.
Annemarie Medrzycki, online marketing manager at Arizona Outback Adventures (AOA), largely attributes AOA’s increased sales to meeting her customers where they are. But AOA doesn’t invest in banner ads or costly sponsorships to garner attention online. Rather, they employ tactics designed to generate leads. Says Medrzycki, “Most of our strategy has revolved around SEO best practices, developing useful content that is relevant to our customers, connecting to past customers with email marketing campaigns, and fostering strong relationships with relevant media outlets to cultivate good editorial coverage.”
Social media, too, has made it easier for tour operators to get in front of customers. Launched in 2006, Twitter now has 316 million monthly active users, while Facebook has surpassed a staggering 1.4 billion along with 700 million monthly users on Facebook Messenger. Platforms like these have given businesses an avenue for reaching new customers, as well as building brand affinity and fostering word-of-mouth. Last year, the Association of British Travel Agents (ABTA) reported that 44 percent of millennials use social media sites like Facebook and Twitter to research or plan a trip.
44 percent of millennials use social media sites like Facebook and Twitter to research or plan a trip.
“Social Media is important to [our] marketing efforts as it allows us to reach a broader audience with compelling content that introduces people to our brand experience and drives traffic to our website,” says Karen Sinclair, director of marketing with adventure travel company Zegrahm Expeditions. Sinclair focuses most of her efforts on Facebook, which she says is the go-to social network for her “older, affluent demographic.”
Another major driver of growth for tour operators has been a strong interest in specialty adventure tours. From 2009 to 2012, adventure travel in North America, South America, and Europe expanded by 65 percent—and this boom will carry on with another revenue boost of 23 percent this year.
“Studies have shown again and again that adventure travel is on the rise. We’ve seen that reflected in our own business,” AOA’s Medrzycki says. “I think that people are choosing to travel differently than they used to. There is a greater focus on finding new experiences and cultivating memories.”
According to Magaly Toribio, marketing advisor for the Dominican Republic Ministry of Tourism, while beaches are still a draw, travelers are booking trips to mountainous areas like Jarabacoa and Samaná more and more. “When visitors flock to these lush areas to experience Mother Nature’s playground and hunt for adrenaline-pumping thrills, they often choose to stay at fitness-oriented boutique hotels,” Toribio says.
Online Bookings…and More
Let’s not forget the importance of online travel booking, which reached an all-time high back in 2013. “We have online reservations capability for those who prefer to book their trips on our website, and have had this for at least the past eight years,” Sinclair says, adding that she’s seen “some growth” in bookings completed online.
But Sinclair also points to another possible factor for mounting tour operator revenue: cost. “Trip prices have consistently risen since 2008 for most tour operators, which contributes to the trend we are seeing in revenue growth,” she says. “For Zegrahm Expeditions, we have continued to see growth in our overall revenue, expanding the number of trips we offer on all seven continents and increasing the number of guests that travel with us each year.”
So what’s the next major trend to influence tour operator revenue? It’s sure to be mobile, with smartphone-based bookings expected to “surge” in the years to come. In the US, mobile bookings accounted for 5 percent of travel bookings in 2012 and will likely grow to 18 percent in 2016. In Europe, the jump will be from 6 percent to 22 percent, and in China, from 1 percent to 33.
Tour operators who embrace this channel shift will surely be rewarded. And for those who effectively leverage all of these business strategies? There’s no end to the sales in sight.