The long view on packaged tours as a travel category is bright, said Christine Petersen, the president and CEO of smarTours, a private-equity backed operator. But the sector must adapt to a socially distanced world in several practical ways if it wants to stay relevant and profitable.
The multi-day packaged tour sector has been hit with forces that will transform it from the inside-out. Tour operators are now rethinking group travel, as hygiene-hyperaware leisure travelers seek more self-contained holidays at less adventurous destinations.
Packaged travel will find a profitable path to a rebound if operators make sensible adjustments to their offerings and cost structure, said Christine Petersen, the president and CEO of packaged tour operator Smartours. In a Friday interview on “The Long View With Rafat” livestream, Petersen told Skift founder and CEO Rafat Ali that packaged tours will increasingly include smaller group sizes, more off-peak season itineraries to avoid crowds, and more a la carte customizations with more flexibility in last-minute re-bookings.
Until now, package tours focused on exotic foreign destinations like China as well as urban adventures like multi-city European itineraries. But smarTours, a New York-based value-priced tour operator, will soon announce domestic itineraries. They will also look at emphasizing foreign destinations that have a reputation for clean open spaces. “All the countries run by women” will see inbound international traveler interest rebound first, said Petersen, half-jokingly making a reference to how Iceland, Germany, and New Zealand have had strong containment efforts during the coronavirus crisis.
Petersen said that smarTours, which has offered escorted tours worldwide for 200,000 people since 1996, has the financial wherewithal to experiment as it is backed by private equity and had seen double-digit, high-margin growth in the past year. She expects the first tours to resume in June, and said most of her company’s customers had accepted rescheduled departures or vouchers rather than insisting on cash. For new bookings, smarTours is offering deposits as low as $99 rather than the customary up-front deposit of about half of a trip’s value.
Traditional tour operator package holidays have been mostly sold offline with fixed prices for fixed combinations of flights, hotels, and guided experiences.
But Petersen believes the path forward for package tours is through digital innovation. She said operators will need to offer flexibility in assembling packages from a variety of flights, hotels, and itinerary options and to make the booking process friendlier to travelers, such as allowing text and chat app communications where possible.
Petersen speaks from online experience. Before taking the top job at smarTours about a year ago, Petersen served as CEO of Time Out Digital and was president of Tripadvisor for business and chief marketing officer.
Already smarTours sells its tours directly or through carefully selected third-party partnerships, avoiding sales via online travel agency giants who may try to disrupt their close relationships with buyers or charge high commissions.
You can watch the recording of Petersen’s conversation with Skift CEO Rafat Ali, here:
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Photo credit: Zaanse Schans is a neighborhood of Zaandam, near Zaandijk, Netherlands. It's best known for its historic windmills and houses. Smartours