Leigh Barnes, the chief customer officer of Melbourne, Australia-based tour operator Intrepid Travel, can attest to the challenges companies like his face when incorporating new technology.
“One day, we accidentally sent a test email to a small segment of our customers with song lyrics by Lionel Ritchie,” he said. “There was no data breach, and we owned the issue straight away.”
“But we did receive some very funny replies from our customers. It was a reminder of the care you need to take with embracing technology at such massive speed.”
Although Barnes chuckles about the story, tech issues regularly haven’t been a laughing matter for tour operators. Companies in the sector have long struggled due to their reliance on outdated technology that has inhibited their ability to make bookings.
But multi-day tour operators today are benefitting from technology advances giving those companies a much-needed boost after the pandemic significantly damaged their businesses. The global tour operator software market, estimated to be worth $500 million in 2020, is projected to be valued at $1.2 billion by 2026. Some tour operators are spending more than $1 million on technology. Among those big spenders is Intrepid Travel, which is upping its technology budget for 2023 by 189 percent from 2019.
“New businesses … are built with technology at the core (and take) a marketplace view to their business model, which allows them to grow, test and scale much more efficiently,” said Tony Carne, chief operator officer at Airguides, a Peregian Beach, Australia-based agency that works with destinations on sustainability messaging, and a contributor to Skift.
However, multi-day tour operators, which run trips with groups of anywhere from 10 to 25 participants around pre-sent itineraries and departure dates, still face an uphill climb with integrating and maintaining new systems.
“(A decade or two) ago, many large tour operators had huge IT projects with tremendous budgets that failed either immediately or soon after the attempted launch,” said Manuel Hilty, the CEO of Nezasa, a Zurich, Switzerland-based travel technology company that has worked with TUI, the world’s largest tour operator.
“In recent years, however, the technology available in the market has advanced, and tour operators have also realized that it is often better to buy than make.”
Vidar Svansson, the CEO of Kaptio, an Iceland-based company that provides a booking platform for multi-day tour operators, has noticed a similar shift.
“(Tour operators) are not in the business to develop software, and they shouldn’t be,” Svansson said, adding that he still sees travel companies use systems developed over a decade ago that are complex to update.
“The most successful growth stories are when these brands, faced with the paradox of whether to buy or build, choose to partner with a third party technology provider … rather than custom build only for themselves without future proof.”
Marketing is one of the biggest challenges tour operators face, and it’s something that Tom Buckley, chief commercial officer and co-founder of New York-based tourism marketing agency Dune7, believes they’ve struggled with.
“Operators spend too much of their time and effort on paid marketing channels. Once budgets are spent, the value disappears,” Buckley said.
“Getting packages and itineraries to market in short time frames that have layers of complexity based on logistics, pricing, currency, partners, suppliers, languages, and then marketing it at the right time, right place and over the right medium is no easy feat.”
So tour operators are turning to automation via software platforms to market their itineraries, which includes creating digital brochures. That’s a shift from their long-time focus on developing physical brochures, which Buckley sees as not only resource intensive but could be only placed in bricks and mortar stores. He added that more tour operators embracing customer relationship management programs partly because they’re more affordable than reservation technology systems that can run hundreds of thousands of dollars.
Meanwhile, Hilty believes one of the hurdles tour operators face is combining the different types of multi-day tour elements — such as hotels, attractions, and transportation options — into one customizable trip. Nezasa has developed a platform named TripBuilder which combines products and services from multiple sources on one platform. Hilty added that the platform also enables tour operators to offer trips they create for different users, such as business-to-business to travel agents with their own login commission and pricing setup possibilities.
Hilty acknowledges that a concern about TripBuilder is how the the platform fits into the tour operators’ current technology landscape.
“What systems are currently used by the tour operator, which ones to keep, which ones to remove and how to easily integrate a new system into it,” Hilty said about the challenge Nezasa faces. He said the company has built a set of application programming interfaces that makes integration easier, as well as reduces the time required for onboarding and incorporating new customers.
Kaptio — which counts Audley Travel, the Travel Corporation and Rocky Mountaineer among its clients — has also developed its own platform, which isn’t focused on customizing software for each customer. Its Kaptio Travel Platform reduces the number of underlying systems tour operators use. It’s also enabled such companies to automatically generate customer-facing documents and obtain access to live inventory from contracted and third-party suppliers.
Ragnar Fjolnission, Kaptio’s founder and chief product officer, believes that being backed by customer management system Salesforce has helped the Kaptio Travel Platform solve challenges for tour operators.
“Finding a travel booking platform that is customer-centric, rather than booking-centric, is vital to meeting customer expectations, especially when it comes to personalization,” Fjolnission said.
Meanwhile, Svansson cities sales teams as a significant beneficiary from Salesforce, which contains customer records, since they can access inquiries and quotes that could result in bookings.
“Sales teams can follow customers through their journey until they (convince them to) become a buyer, even further,” he said. “The data can be used for loyalty and re-targeting purposes to offer future trips and benefit from repeat bookings.
However, Svansson admitted that implementing the Kaptio Travel Platform is complicated, acknowledging that it requires tour operators to completely overhaul their technology and obtain approval from company executives. Kaptio estimates factors such as licensing, implementation, new hires and consultation can drive the cost of investment over $1 million.
“Tour operators that simply change out one system for another without leading change toward digital transformation often do not leverage new technology to its full potential,” Svansson said. “Using a new system not as designed not only is costly but also limits the value realization.”
But Hilty states automation as a significant area tour operators need to improve in, citing the difficulty of automating booking changes both pre-departure and during a trip.
“Many tour operators still have a lot of manual process in place as soon as products get more personalized,” Hilty said. “It gets even more difficult in the post-booking area — automating booking
changes both pre departure and in-destination is very difficult, but it is becoming increasingly important as the the current number of flight cancellations shows, for example.”
Regarding automation, Boston-based Explore Worldwide uses a tool called Parabola to automate extraction, data cleansing and analysis of its customer service feedback. Andrew Steward, Explore’s head of digital transformation, believes Parabola has enable the company to devote more time to its products although he believes that’s not the most significant benefit it provides.
“Often it’s not a case of saving time on current processes but more about being able to do new things that provide benefits to customers or the business that there aren’t currently resources available to do manually,” Steward said.
What are those new things? Steward cited the ability to respond to resolve issues mentioned in customer reviews quickly. Such information had been previously held in a third party program prior to be downloaded into an Excel spreadsheet on an ad-hoc basis. Steward added product managers then had to do their own analysis.
“Now we have set up a reviews database and overlaid dashboards with traffic light scoring, trend reports and filtering,” he said. “This process is all automated, as soon as a customer leaves a review, it’s automatically sent over to our database, so our product managers are now able to identify any issues much quicker.”
Steward maintains incorporating the automating tool into its digitization hasn’t been difficult.
“The only real challenge with using tools like Parabola is ensuring that you have a clear view of what you want to achieve before you start, including the current challenges/time spent doing the job manually so you can ensure you’re not just automating for the sake of it, but that it provides real benefit to the business.”
And as tour operators increasingly automate, they’re repeating the benefits of more services being online, with Hilty citing in particular Airbnb, Booking.com, and Viator.
“Today, much more products are available online, with prices, descriptions and availability,” he said. “We’re still far from 100 percent, and will be so for a long time. But there has been a huge development in this area.
The Major Software Boost
The realization among tour operators that they needed more modern software has driven them to seek software as a service (SAAS) platforms like Travefy. While Scott Rutz, the vice president of sales and marketing for the Lincoln, Nebraska-based company, believes there’s no shortage of quality booking platforms for tour operators, he asserts the pandemic drove home the point such companies were struggling in another critical area.
“They had great tools for bookings but not equally as great as tools for working with clients,” said Rutz, whose company also serves destination management companies. “A lot of travel advisors and tour operators realized going through the pandemic realized, in a very painful way, they did not have good documentation.”
“They weren’t keeping track of e-signatures and proper approval forms for clients. And that left them in a tough spot in terms of liability when they did not have good documentation showing that a client approved the terms and conditions and the cancellation policies.”
To address that void, Travefy built tools in its client management system and in its forms so a tour operator could use a template to gather information from a customer. “When a client fills it out on a smartphone, tablet or a computer, that information gets automatically stored in Travefy’s system for that operator,” Rutz said. “That way, it speeds up the process.”
Travefy also features a database of locations worldwide that help tour operators to better prepare their itineraries. Rutz said an employee of a company planning to take a group to cafes on a culinary tour could type the names of such establishments and see information such as basic details, maps and photos. He added Travefy works with up to 20 different data sources that enable tour operators to list city guides and destination content on their platforms.
So are SAAS providers making inroads in the tour operator sector?
Intrepid’s Barnes sees more tour operators, his company included, using SAAS platforms. Salesforce, its customer relationship management system, is Intrepid’s most prominent SAAS platform. Nevertheless, he believes the digital transformation has taken longer for tour operators than companies in other sectors due to the complexity of creating a tour and the lack of suitable platforms for operators.
“I think we’re in the early stage of SAAS in the multi-day tour operations space,” he said, adding marketing technology SAAS programs are far more prevalent.
“I think SAAS from a pure marketing and sales (stand point) will be quite mature, and most organizations will have some have level. But as far as having an actual SAAS set up for their tour operations component, we’re not as mature yet.”
However, Barnes added that he envisions tour operators in the near future being able to run their full trip operations, including revenue management and costumer communications, through a SAAS setup.
“I think over the next three years, you’ll see that drastically become (more prevalent) with tour operators.”
Future Technology Challenges
Although Barnes believes that tour operators are increasingly poised to embrace SAAS platforms, how do they ensure they’re not falling behind on technology advances that could make booking trips easier in hyper-competitive environment?
“The coy answer is that we don’t — just in the sense that we are continuing to clean up legacy and foundational challenges to make sure that we have a solid base for moving forward right now,” said Eli White, the chief technology officer of Old Greenwich, Connecticut-based smarTours.
White added that smarTours is looking for technology and services that he described as possibly being the next big thing for the company and solve any future issues. But he acknowledged that smarTous hasn’t found those advances yet.
Meanwhile, as Hilty still sees a lot of work to be done to digitize the tour operator, Barnes believes tour operators need to be cognizant of their business operations and needs to make technology updates.
“I’d recommend to companies to get an understanding of where (your) value is …. and then from that, prioritize where (you) need to be innovating and where (you) need to be getting technology solutions,” Barnes said, adding that he gets on average 10 emails daily from companies pitching software programs.
To prioritize those innovations, Intrepid has developed a value chain and a long-term strategy. “And we build a road map that helps us get there,” Barnes said, providing becoming the first billion-dollar adventure travel company as a hypothetical target. “What technology do we need to get there?”
“And then we’ll have a process where we discuss and prioritize around we think gives us the most value fastest.”
The surging demand for travel post-pandemic also presents enormous tech-related challenges for tour operators, which — like other sectors of the travel industry — have been hit hard by staffing shortages. Rutz believes tour operators have suffered a brain drain since the start of the pandemic, a point Svansson seconds.
“Tour operators are experiencing a huge challenge, post-pandemic, trying to bring back the talent into their workforce that is needed to manage the heavy systems they use and process the return of customer demand,” Svansson said.
“This creates a cycle of postponing investment in scalable technologies and leaves these brands stuck, unable to keep up with demand nor leverage new digital sales channels, which limits their growth.”