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Pros and cons of working with a tour operator

Pros and cons of working with a tour operator
Jan.7, 2020
by Hotelbeds

A tour operator puts together holiday itineraries and creates bespoke packages by bundling the individual services which make up those itineraries. Often, these services include accommodation, local guides and transport. The tour operator then markets and sells these directly to the traveller. 

Efficient distribution partnerships with tour operators are now a vital part of any viable hotel revenue strategy, especially for those with a focus on the leisure segment. That’s why it’s sensible to review your options and to diversify your distribution strategy to include tour operators. And since each tour operator focuses on a different segment, it’s worth spending some time upfront to find the best way of working with them to get the most for your business.

So, what exactly are the advantages and disadvantages of working with tour operators to distribute your rooms?
 

The pros

Access to new markets

Access to new markets

Working with tour operators can provide you with access to markets that you can’t currently reach, including high-value guests who often book ahead, cancel less and return more often.

Better forecasting

In the past, annual demand patterns for tour operators were relatively consistent. Working with tour operators can be a great way to help to improve your forecasting, allowing you to predict occupancy rates more actively and manage your revenue more effectively.

High volumes of guests

Tour operators can provide significant numbers of guests at one time, allowing you to sell rooms through at high volume.

Zero impact on direct channels

Tour operators allow you to distribute opaque rates that do not directly impact the price perception of your brand and which have no impact on your direct channel activities.

 

The cons

All that glitters is not always gold, so while this is a valuable channel, it’s important that you are aware of some of the potential challenges that come with distributing your rooms via tour operators:

Less control of rates

Time-consuming and unproductive

Deals must be negotiated, renewed and closed one by one. This is complex, inefficient and hard to sustain. Negotiating multiple contacts individually can be time consuming and unproductive. Bedbanks like Hotelbeds release you from this inefficiency as they act as a hub, taking care of the negotiations and giving you access to more than 3,500 tour operators via one unique contact point. Working with a bedbank, you'll never have to close individual deals with tour operators again.

Less control of rates

Losing control of your rates is a threat you need to be aware of when working with tour operators. May occur that tour operators don't respect your agreed conditions, unbundle your opaque rates and sell them publicly. A discount that was meant to be only for B2B opaque channels is now competing with your brand.com rates. Hotelbeds is implementing a range of initiatives to ensure our tour operators respect your rates and sell them under the contracted conditions

All your eggs in one basket

Getting the right distribution mix for your brand is vital. Giving too much volume to one individual tour operator may be a risky strategy; you might have become over-dependent over a third-party company, and you might lose control of your revenue. Hotelbeds helps to avoid this and help hoteliers to diversify your distribution pie through their extensive network of tour operators.

According to Diego Fernández, corporate revenue director at Palladium Hotel Group: “One of the keys to success in the hospitality industry is to have everything in balance. If one day the basket breaks, all your eggs are out. We are trying to do the same with our distribution strategy; if one market is suffering, we know we can replace this market with another one.”
 

Find out more

If you’d like to learn more about effective distribution strategies, which distribution channels are best and how to get the right mix of channels in place for your business, check out the Hotelbeds guide to hotel distribution in 2020.

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