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.