Last year TourConnect released the results from our Inaugural Tour Operator Survey in which we asked tour operators about the struggles they had regarding managing relationships and supplier rates. The results were so helpful in shedding light on some of the challenges within the tourism industry that we decided to expand on it to include information from the Supplier’s perspective. We hope you find the results of the survey as fascinating as we do. Be sure to click on the links below for our detailed analysis as well as checking out our 2015 Supplier Survey Results to see how they compare to the supplier results.
NOTE: Results from our 2015 Tour Operator Survey will be published next week.
The Basics: What do Travel Supplier Organizations Look Like?
The data we collected came from a mixture of hotels, hostels, bed and breakfasts, day tour operators, attractions, and other similar suppliers of tourism product. This year’s survey participants spanned across 21 countries. This broad range of suppliers has helped give us a holistic view of the global industry.We found that supplier companies had an average of 5.3 locations, with accommodation suppliers, specifically, having an average of 7.4 properties. When we took a deeper look at the data, we found that 60% of the suppliers were small businesses with just 1-2 locations. In addition, 56% of the suppliers had between 1 and 10 products while 11% had more than 50 products.
While the global and regional hotel chains often get the most visibility in industry media, the numbers show an industry with a large base of small businesses. There is a significant diversity to the businesses within the industry, which is great; however, it creates a tremendous amount of product trying to get out into the marketplace. From mom and pops with just a couple of products to behemoth chains with hundreds of products, everyone is trying to sell their products, and it is creating an administrative nightmare for the industry.
Let’s Get Together: Who is working together in the industry?
One thing is for certain, this industry is built on relationships. Of the suppliers that responded to our survey, 72% had more than 26 partners selling their products. These partners include inbound tour operators, outbound tour operators, wholesalers, and travel agents. These relationships are the foundation of the industry, bringing travelers to great destinations and ensuring they are booking great products. As one would expect, most suppliers, or 87%, said they would like to find new partners to sell their products. Interestingly, while so many are looking for new partners, 24% could not produce a list of their partners in less than 20 minutes. They are looking for new partners when they can’t even tell you who they currently work with. We take a closer look at this in our blog, Quick! The office is on fire! Can you get a list of your contacts?
On top of this, we were surprised to learn that 70% of suppliers send rates to companies that do not actually send them bookings. In fact, several suppliers said that less than 20% of their partners ever send them bookings. This is flooding the market with product, and making it difficult for the entire industry to efficiently generate sales. We took a minute to examine this in our blog, Are you a spammer?!
All of these relationships come at a significant cost. We found that 60% of suppliers spend over $5,000 on tourism industry events, with several spending over $100,000 a year on these events. In addition, 71% of companies take at least 1 overseas, in market trip to visit their partners. When you factor in the time and staff traveling and attending events, this is an enormous cost for any organization. This highlights the importance of knowing who you partners are, and finding ways to maximize the sales that they can generate. This will ensure a high return on the investment made in finding and working with partners.
Let’s Do Business: How are rates are exchanged between partners?
In order to do business, and actually generate revenue from partnerships, suppliers must communicate their rates and product information to their partners. This is often done on an annual basis through rate sheets or contracts. Unfortunately, there is no standardized format for rates and product information. The paperwork this causes is staggering.For suppliers, they simply send their rates any way they want, and then call it a day; however, that’s not the entire story. After asking suppliers how they are sending rates to their partners, we used our Contractor Survey from last year to help articulate just how big of a burden this generates. An average tour operator would receive about 2,550 emails, including 400 different PDF formats and 350 different Excel formats, 150 faxes and phone calls, each, and be forced to go to 200 supplier website portals. We were blown away by the huge number of formats these companies deal with.Now, while we just said, “suppliers simply send their rates any way they want, and call it a day”…that may not have been entirely accurate. We were surprised by the fact that 87% of suppliers took more than one day to send rates. This was surprising because this contradicts what they were telling us in our conversations at industry events – that they send them and forget about it. To add to the problem, 70% of suppliers said that they have to resend or clarify their rates every year. This is just one example of how this manual process is leading to significant costs. It’s clear there are real costs to this issue, when, for example, 59% of suppliers said they have lost money from cancellation or on a booking with incorrectly loaded rates. This is a big deal, so we give you a lot more information about these impacts in our blog, Confusion, Angry Customers, and Burned Money.
We Are One: Learning and Growing as an Industry
As the results of this survey came in, the team at TourConnect couldn’t have been more excited. Our industry doesn’t have a track record of self-evaluation or self-awareness. This survey is just a small step towards creating an industry-wide culture that values learning and growing for everyone to benefit. The more that organizations within the industry can appreciate each other’s business models and challenges, the more we can all help each other.
We look forward to future surveys, as well as working to facilitate great conversation across the industry. Follow us on Twitter or Facebook to keep up to date on the latest industry research and insights.