Is the multi-day tour industry ready for digital transformation?

While companies in other sectors of the travel industry, such as airlines and corporate travel management companies, are re-thinking e-commerce and distribution, multi-day tour operators are largely playing catch-up to capture a new generation of travelers.

Today, inspiration occurs while scrolling TikTok, Instagram or a bevy of third-party marketplaces. Gone are the days of a linear customer journey via a travel agent or glossy tour operator brochure.

The digital transformation that’s forever changed booking a flight, staying at a hotel or hailing a cab is coming for the multi-day tour sector. But only for those operators who heed the call to innovation and are ready to embrace this new era.

The World Economic Forum’s Digital Transformation Initiative (DTI) forecasts that digitalization in aviation, travel and tourism will create up to $305 billion of value for the industry through increased profitability, transfer $100 billion of value from traditional players to new competitors and generate benefits valued at $700 billion for customers and the wider society.

For tour operators and sellers of multi-day travel, digital transformation has always been elusive, with little incentive for change. However, as consumer preferences and behaviors evolve and the distribution landscape becomes more complex, we’re seeing modern day tour operators and sellers of multi-day travel become aware that a fundamental shift in how they merchandise and sell their products is needed.

How can tour operators prepare?

In the past, even the largest tour operators could get by with clunky platforms or legacy tech built for other sectors of travel. Most operators sold one product type to one cohort of travelers.

Now it’s different.

Tour operators are diversifying their product range, for example, selling cruise experiences while cruise brands want to sell more land excursions. Today, the same operator offers a custom, luxury line of products for baby boomers while also selling standard group departures for younger, more budget-minded travelers.

More than ever, the companies who buy into innovation and invest in modern tech stacks become the winners — streamlined, customer-centric and flexible.

How can companies tell which side of the digital innovation curve they fall on?

Given our work with some of the world’s largest experience brands, we believe this state of readiness is best portrayed via three main company traits:

1. Ambition and growth potential

The most crucial factor is a forward-looking mindset and leadership driven by innovation and expansion. While current employee numbers and passenger counts matter, the operators best positioned to evolve are those prepared to make bold decisions that look well ahead of current fiscal year targets.

To align with a forward-looking mindset operators should:

• Define a clear vision: Emphasize innovation and growth and formalize into objectives and key results and company mission/vision statements.
• Foster a culture of creativity: Encourage experimentation and value new ideas from all levels of the organization.
• Invest in leadership development: Continuously train leaders to drive and manage change effectively.

2. Technology investment

There’s no way to sugarcoat it; transforming a business' digital foundation requires significant investment. This includes upfront costs for licenses and implementation, funding for dedicated teams, digital partners, system integrators and ongoing maintenance.

To make smart investment decisions with positive return on investment, operators should:

• Evaluate technology infrastructure: Audit current core systems and supporting applications to identify gaps and areas for improvement. Consider a multi-phased roadmap to spread capital expenditure across multiple fiscal years.
• Develop a technology roadmap: Decide where the initial investment will create the most value to the business. Create a detailed roadmap, taking into consideration aspects like seasonality and staffing requirements.
• Partner with experts: Collaborate with technology providers and consultants for specialized support.

3. Internal expertise

Robust internal teams are crucial for successful digital transformation. Tour operators must identify skill gaps, hire new talent and invest in training programs.

Steps to build internal expertise:

• Hire and train talent: Address skill gaps and train existing employees in project management, IT and digital marketing. Consider looking outside the travel industry to find top talent.
• Create cross-functional teams: Ensure collaboration across IT, marketing and customer service.
• Implement change management plans: Help employees adapt to new technologies and processes.

By focusing on these actions, tour operators can better align with the traits of innovation readiness and thrive in the digital landscape.

The impact of digital transformation

Going forward, there are four areas of digital transformation that we at Kaptio believe will be most impactful to the industry:

1. Artificial intelligence-powered workflows
2. Personalization
3. Revenue management
4. Distribution
   
   

Currently, most tour operators leverage AI as a customer service aid. In most forms, this looks like a desktop or mobile chatbot meant to assist potential customers during the lengthy research and consideration phase.

However, AI has the potential to proactively improve every step of the booking journey, revolutionizing how operators interact with customers.

For example, in the near future operators will have access to robust enterprise AI capabilities through platforms like Salesforce’s Einstein AI copilot, including the choice of AI model, enhanced security, data retention policies and comprehensive auditing features. This level of control ensures that businesses can tailor AI to meet their specific needs while maintaining the highest standards of data security and compliance.

For all the talk about personalizationin travel, most tour operators simply don’t have the tools necessary to truly offer personalized products. It starts with a central source of truth for passenger data and the ability to grasp personal preferences and present a package before the customer ever asks.

Why should a loyal passenger need to call a sales rep to describe their next dream trip?

Going forward, operators will be able to use technology to anticipate customer needs and offer truly customized itineraries. Personalization features will become more dynamic, AI-driven, grounded in customer data and strengthened by real-time supplier connectivity.

Unlike the single day tour and activity market, revenue management in the multi-day sector is rather nascent. However, customers are exposed to dynamic and variable pricing quite frequently through adjacent travel bookings but also via products in the dining and entertainment industries.

There’s a growing appetite among savvy tour operators for revenue management tools that support dynamic and variable pricing strategies, which include fluid pricing based on supply and demand and crafting specific marketing narratives for each channel to maximize revenue through digital sales. Going forward, operators will even be able to create bespoke pricing strategies for certain geographic regions.

And while AI, personalization and revenue management are important, we think that online distribution is the linchpin when measuring the success of a digital transformation journey. Now traditional sales channels like travel advisors are increasingly demanding real-time availability and pricing in order to expedite customer quotes and close more bookings with more efficiency.

On the e-commerce side, there are more options for distribution than ever, via multi-day specific online travel agencies like TourRadar, Travelstride and Evaneous.

When done well, modern distribution platforms and channel managers will empower operators to reach a broader audience, maximize bookings and optimize sales channels.

By fully embracing digital transformation, operators can enhance customer satisfaction, drive economic growth and contribute to a more sustainable travel industry. This transformation holds the promise of a future where operators can offer a wide range of diverse and differentiated products that cater to the evolving demands of modern travelers, ensuring a vibrant and dynamic multi-day tour sector.