5 minute read
In times when the travel industry has come to a standstill and is facing its biggest crisis to date, tour operators and travel agencies need to innovate and adapt to the new normal.
We’ve closely monitored trends and actions happening in the last few months. We’ve talked to numerous clients and asked about their first-hand experience and plans in dealing with this situation.
And from what we hear, most of them are switching to domestic travel.
This comes as no surprise because with the pandemic declining, UNWTO reports that 100% of the countries imposed COVID-19 travel restrictions, with more than 45% of them issuing total or partial ban to international tourists.
Among the first who started talking about switching their focus to domestic travel are tour operators from the U.S. market. They understood pretty early that the best way for them to survive this crisis is by refocusing.
However, not all countries are in a position to do so efficiently because they either depend too much on air travel, or their domestic market size is too small, or purchase power too weak. And even for countries that are in a good position to switch to domestic, refocusing isn’t enough because it is hard to remain profitable by only doing domestic tours.
How to remain profitable with or without domestic tours?
The U.S. tour operators realized that to stay profitable – with or without domestic tours – it is crucial to lower the overhead costs while at the same time, increase tour volume.
While the most obvious way of cutting costs would be laying people off, with fewer people, you’ll lack the resources to achieve high volumes. So, these two goals appear contradictory.
Well, not necessarily!
The U.S. tour operators came to a realization that they cannot remain profitable without optimizing their business processes.
Why is that so?
Have you ever thought about how expensive your process is? Let us show you a real-life example from one of our clients where their gross working hour costs 40$ and they issue 10.000 quotes yearly.
|Process||Time Per Quote||Working Hour Cost||Quotes Annually||Annual Quotation Cost|
|Quote Creation||1 hour||40$||10.000||400.000$|
|Itinerary Creation||30 minutes||40$||10.000||200.000$|
|Supplier Communication||10 minutes||40$||10.000||70.000$|
|Total||1 h 40 min||40$||10.000||670.000$|
So, for 1 hour and 40 minutes of their work, they annually spend 670.000 dollars. But imagine if we could optimize the business process in such a way that would save a third of that money. In the example we’ve shown, that’s 22$ per quote or 220.000$ annually of money that can be saved!
This is a short and high-level overview of costs that eat up your profitability. However, in 20 years of working closely with tour operators, we’ve discovered more than 40 areas where they lose money without even realizing it. Therefore, the chances are, you too are wasting a lot of money on your current process.
The good thing is that lockdown prompted travel businesses not only to rethink their business strategy, but also to find the wasters, identify gaps, and find optimization opportunities in their organization.
And companies that invest in the digital transformation of their processes end up raising their profitability for each quotation.
In short, the best way to make your domestic – or any – tours more profitable is to digitally transform your business processes. More specifically, digitalization will enable you to automate most of the manual work, thus lowering overhead costs and increasing the profitability of each sold experience.
Digital transformation beyond just a common buzzword
Digitalization is not only important to make domestic tours more profitable. It is crucial to stay competitive, more profitable, and more efficient in the long run, too.
Increasing profitability and boosting efficiency have never been as important as they are today. Using several different tools to complete just one piece of a process, or struggling with excel sheets and managing everything with a pen and paper is not sustainable anymore.
In contrast, centralizing the communication between the client, agent, and supplier will free so much of your time, that it will allow you to focus on providing your travelers added value and unique experiences.
In conclusion, COVID-19 forced entire industries to go completely digital – and this has become the new normal. Companies that made a quick switch survived, while others face the risk of not making it. For many, the recovery will take years. But, one thing is sure – keeping the status quo won’t allow us to move forward and adapt to the current, and future situation.
By challenging the current way of working, and setting new standards we’re allowing travel agencies and tour operators to achieve higher volumes with lower overhead costs. Make sure to be two steps ahead when the time comes. You’re already an expert in creating priceless experiences for your travelers. Let us show you how to make them more profitable, for you.