Written By: Tom Ogg
At some point in every travel professional’s career the idea of moving into the group travel business surfaces and is explored. Of course, the motivation behind considering entering the group business is the potential for a large return for your efforts. Selling group travel can be highly rewarding both personally and financially.
However, as in most things, becoming a successful group agent requires many things and not the least of which is having a valid and well thought out concept for your business. Understanding and defining exactly what you are going to accomplish is critical to your success.
So this is the first in a series of articles that explores the business of conceptualizing, organizing, costing, escorting and operating a successful group niche that will provide you with the rewards that you seek. I share this information near the end of a 45+ year career in the travel industry and having moved hundreds of groups both as a Hawaii wholesaler and an entrepreneur.
Operations vs. Marketing?
Group travel operations can be extremely complex. Imagine trying to put together a 17-day group tour around western Europe for 40, a destination wedding for 60 in Puerto Vallarta and a 14-day tour for 24 through S.E. Asia. You can easily see the challenge, especially if it was your first group in each scenario. One of the very first decisions an agent must make is “What is my group business going to look like?”
Establishing a business that is dependent on never ending operational tasks is surely bound to be less productive than one that relies primarily on marketing. To illustrate the challenge, consider selling 12 different groups to destinations all over the world vs. Selling the same group 12 different times where the destination and itinerary are all the same. 12 different groups to different destinations and itineraries would be an overwhelming task to pull off with any degree of operational competency. However, selling the same group over and over reduces the operation to simply executing the same operational function repeatedly.
You should settle into the reality of the operational burden of groups long before you evolve a concept for your group business.
Simple vs. Complex
Depending on what your overall revenue objective is, the more complex the itinerary is, the higher the internal yield will be. Selling cruise groups on a 3 night cruise at a commission of $29 per person is going to be of questionable viability. Selling multi -country international groups with a mark-up of $800 per person is going to be extremely viable.
Understanding the relationship between complexity and profitability is key to building a successful group business. You should project just what kinds of groups you will handle and their potential to generate internal yields that are consistent with your overall group business plan.
Price vs. Value
Many agents think that by selling groups that they will be able to set pricing that is motivating to potential clients. For the most part, it is more expensive to move groups than it is to sell individual travel. Groups tend to be more all-inclusive than FITs and as such, tend to be more costly.
Since price is rarely a motivator to join a group, agents should focus on adding value to the movement. This can be accomplished in a number of ways. Adding inclusions unique to the group is one of the best ways to add value, as is offering professional escorting services to the group. Focusing on special niches where you have expert knowledge of is another way to bring value to the group.
Understand that there are many reasons people are drawn to group travel and one of the most important is that they are confident that everything will go as expected and that the escort will keep them safe and sound. Group travel can remove the fear of the unknown for many travelers who would never strike out on their own in a foreign country or unfamiliar environment.
Individual Travel vs. Group Travel
Of course, moving into group travel may have a dramatic impact on your sale of individual travel because of the very nature of marketing and operating groups. Be sure that you are ready to commit the necessary time and resources to make your group travel effort successful. Understand that this impact may well cost you revenues on your individual travel side of your business.
Group travel has various stages of development. The initial planning stage, the marketing stage, the options (various payments) stage, the liquidation stage and the actual process of moving the group.
Financial Risk vs. Rewards
While everyone wants the financial rewards associated with group travel, understanding the financial risks is mandatory. When packaging group travel many suppliers will want a security deposit in order to commit space for a group. And, these deposits may become non-refundable in the worse case scenario should a group fail to materialize.
While there is a steady cash flow in selling individual travel, group travel seems to be more difficult to manage unless you have established a pattern of groups that mature monthly, or during a similar period. Making sure that your group effort is well capitalized is another key to success.
All in all, your group business must conform to these issues and the more you plan your group business based on these realities, the more likely it is that it will be successful. Do consider each and every point made here when first conceptualizing your group travel business plan, as these the the key factors you will encounter.