The tour distribution process is one of the most important things operators need to get to grips with
Tour distribution is generally thought of in a different way to how other businesses sell their product. In most industries, distribution is purely a matter of logistics. Products must be shipped from their point of origin and delivered to consumers in a profitable fashion.
For the tours, activities and experiences industry this is backwards — the consumer usually works out their own logistics and arrives at the product. If an operator is involved in ensuring their customers arrive in the right place, it is usually only the last mile from their accommodation.
Here, we’ll run through how tour distribution and channels work, and how to enhance your tour distribution process.
So how does tour distribution actually work?
Distributing tours, activities and experiences allows products to be sold in advance through direct methods, such as an operator’s website, or indirect methods, such as through an online travel agency. It is the placement of the product a consumer is interested in purchasing at a point where there is clear travel intent. This often happens during the research phase of a holiday.
The goal for operators is to distribute their products at the point in time where a future traveller is inspired.
Each method — direct or indirect — is called a channel. There are multiple other channels within these. Accurate information must be able to flow up and down these channels from the operator to the consumer and back. We’ll come back to a description of these channels below.
This information flow is growing ever faster, to the point where live availability, the count of the exact number seats available at that moment, and dynamic pricing, the cost of a tour based on the time and the number of seats left available, are a must to maximise your yield.
Whether it is direct or indirect, there is always a cost to distribution that needs to be accounted for. In the case of a website, this will be the cost of development, hosting and domain names, as well as content production and advertising. Indirect distribution will usually be through a commission structure of some form — there are many.
The importance of channel management
Managing that information is an impossible task for the brain. With a huge range of channels to distribute tours on, the information exchange scales almost exponentially. This is why channel managers, one part of Ventrata, and content management systems (CMS) for operators, such as Magpie, exist. They ensure all the information on each channel is correct, enable sales, process these and make the information easily digestible for deep analysis.
Channel managers and CMSs work through a bit of computer magic called an application programming interface — an API. At its most basic, an API sends a request for information, or calls it, and then delivers it.
Within the tours, activities and experiences industry, the main API is called OCTo. This ensures that all the information exchanged is standardised across all channels.
Excellent reporting and analysis
Once you have all your channels up and selling, you need that reported and analysed in order to act. The only purpose of raw information is for it to be analysed so that you can find the meaning in what it is telling you.
A good channel manager will present such business information to you in a clear and simple fashion. The most important information should be graphed and charted so that headline figures stand out, and so that positive or negative trends can be spotted easily.
It will then allow you to drill down into these figures to pull out what that trend means. Why is one channel doing this? Why is another doing that? Do you need to turn off one channel? Change the commission paid to the next? Push more seats towards another?
Your channel manager should give you exactly the information you need to make the marginal gains in your tour distribution process that add up to being a super profitable operator.
Tour distribution channels
Direct distribution channels
Direct channels are those that you control and any money spent goes directly to your company.
This will be your website. It should be SEO-optimised to appear at the top of Google’s results (unless you’re in Australia, in which case it’s Bing now, I guess) and advertised through social media and search engine marketing.
This will allow potential customers to see all the relevant information they need to inspire them, and to make direct bookings.
Lower operational costs mean that it is likely this is the most profitable direct channel. However, unless you are able to achieve significant traffic and implement a simple booking process, the volume may be low.
These are street sales and those made through your office. They’re all about your walk-ups and up sells, and you’re probably paying both wages and commission.
An excellent channel manager will have a direct connection to the devices used by these sales staff, with all information immediately available in your dashboard and distributed across the rest of the channels you use instantly.
Phone and email enquiries will go through this channel. Up selling’s the large one here, and you’re paying wages and some commission.
For this channel, information will have to be entered into the channel manager manually. So you need to ensure that it is easy to use, otherwise mistakes will be made and your reporting will be wrong.
Some channel managers track emails, like a CRM, and automatically capture sales information from these. This reduces the risk of the information you need being incorrect.
Indirect distribution channels
Indirect channels are those that you do not control and any money spent goes through a middleman.
Online travel agencies and review sites are the main channels in this section. They show your products, usually in return for a commission on each sale or pay per click.
An OTA will work differently to a review site, although they are trending towards each other. Customer reviews are very important here — they’ll break you if they’re bad. Responding to these should be part of any distribution strategy.
OTAs and review sites will form a core part of your business. Any tech that you use needs to be able to connect to them directly and provide as much live information as possible. You also need to ensure that you can respond efficiently to customer reviews. Many OTAs are now curating their search results based on reviews.
OTAs include GetYourGuide, Viator, Expedia, Musement, Veltra and TourRadar, among many others, and TripAdvisor is the main reviews site. Both types will offer sponsored placement. Expedia Local Expert appears to be a victim of the pandemic, and Viator is owned by TripAdviser.
Increasingly, OTAs are moving into providing their own tours, or appearing to do so. This can be seen from both GetYourGuide and Airbnb. Providing a tour to an OTA, or following this distribution channel, will see you lose all branding to gain increased visibility. The stress on quality will be significantly higher.
Deal sites, such as Groupon, can also act as a tour distribution channel. Like OTAs and review sites, these make money by being the middleman between you and the consumer.
You provide deal sites with discount voucher codes that they pass on to consumers. A channel manager should be able to generate, track and optimise these.
Concierges and partner
Hotel concierges, visitor centres, restaurants and other operators can be amazing sources of business. Travel is famous for being one of the few industries where competitors are frenemies, constantly sending each other business in return for a commission.
Your channel manager should provide each of your concierges and partners with a portal that tracks all their bookings, sales and commissions, as well as allowing them to invoice and receive payments, depending on how the commission agreement is structured.
Destination marketing organisations (DMO) and inbound tour operators are other channels that need to be considered.
The purpose of a DMO is to increase the return on investment by gathering together operators and organisations for marketing purposes. Some of this will come directly to your website, but mostly the advertising will be based on a large, destination-based campaign.
Inbound tour operators, however, can be excellent sources of revenue. As with OTAs providing their own tours above, you will act as a supplier. Tours, activities and experiences operators will provide a certain number of seats to an inbound operator, and they’ll add a markup on those sold.
Choose a channel manager that works
Enhancing your tour distribution process is all about making sure you can get your hands on the best information possible from each channel to make the best possible business decisions. Then you continually optimise based on the results.
At the same time, you need to have the ability to provide every distribution channel with the information it needs in a simple, easily manageable way, otherwise it very quickly becomes far too much.
A good channel manager can now do the work of many different programmes, acting as a single technology stack. That means you’ll have far fewer headaches when it comes to the day-to-day operations of your tour, activity or experience.
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