We interviewed industry leaders about what’s ahead for group travel.
Carylann Assante, CEO, Student and Youth Travel Association (SYTA)
Terry Dale, President and CEO, United States Tour Operators Association (USTOA)
Catherine Prather, President, NTA
Peter Pantuso, President and CEO, American Bus Association (ABA)
Consumer inflation seems to be leveling off, and travel demand is returning to normal levels. What do your members expect for 2024 in terms of sales, pricing, expenses and profitability?
Dale: Sales are very, very robust. My expectation when we go out in October for our annual survey is that we’ll exceed 2019 as far as sales. That’s remarkable, considering what the industry went through. Everyone is very optimistic. The thing about inflation is that it appears consumers are willing to put off buying the new refrigerator or leasing the new car, but they’re not putting off travel.
Prather: Our NTA tour operators are telling us that 2023 sales have been very robust and stronger than they anticipated. Yet the high costs throughout their supply chains have caused profit margins to lag behind sales growth. Tours are priced 10% to 12% higher than pre-COVID, but their costs are 30% to 50% higher.
For 2024, most are anticipating a very good year based on advanced bookings. But volatility and cost from suppliers tend to be a challenge and a wild card. Some report seeing a normalizing of price increases to 3% to 5%, like pre-COVID, but this is not across the board.
Pantuso: Everybody has realized over the last couple years that they have to increase prices. There’s no way of getting around it. Inflation has moved the dial, as has demand. From a bus operator’s or tour operator’s perspective, they’re all in the same position. They saw a great resurgence in 2022 and 2023, and they’re hopeful that it continues in the same way into 2024. They’re realizing that you can’t give your product away, and you have to price it accordingly.
The big excitement for a lot of people for next year and beyond is the hope that internationals might be back in the American market more than they were the year before.
Assante: Our research shows that members are optimistic about reaching 75% of pre-pandemic bookings for 2024 if the current environment does not change or get worse in terms of airline costs, delays and cancellations. We went to using more air travel because of the motorcoach and driver shortage, but now we are seeing challenges with bookings, because it’s impossible to rebook 50 students on different flights without a chaperone.
We are seeing 30% higher prices for all aspects of travel. We are also seeing bookings in secondary destinations instead of larger cities like New York, Chicago and Washington. Ultimately, this is a very price-sensitive market.
Now that the pandemic and the worst of the staffing crisis are behind us, where should the group travel industry focus its attention in the next few years?
Prather: My immediate reaction is that I don’t think the staffing crisis is behind us. Perhaps the worst is behind us, but it’s still an untenable situation. I hear across the board that tour operators continue to work two to three times harder to create itineraries, and I know our DMO suppliers are working just as hard. To help with this, at NTA we’re focused on training and mentoring those new to our industry. And we’re looking at how we can help members understand, be prepared for and capitalize on technology such as artificial intelligence. We already have tour operators using AI to come up with clever names for their tours.
Dale: Everywhere I travel, I still hear that staffing is the issue. The challenge in training and recruiting continues to be a real problem. And diversity, inclusion and equity continue to be a big challenge for us. To get a more diverse workforce and customer base will take time and perseverance. When I look at the audience at USTOA, it’s predominately white. We have a long way to go when it comes to bringing in more diverse partners. But that will take time.
Assante: Our members are looking at their customer management and booking systems — upgrading their technology and looking for more efficient ways to build itineraries, keep directories of their suppliers and enable students and families to book direct with them. They still have less staff but are working to do more with less and to do it more effectively. They are looking for short-term opportunities in destinations that add value to their trips — a unique experience like music, cooking or culture.
Pantuso: They’ve got to focus on the basics, which is always critical. It’s about customer service, creating added value, giving customers something they can’t do easily on their own. Talk to the customer, see what they want, what they need and what their interests are. And we always have to differentiate ourselves from the person who goes to Google to figure out what to do on their own. That’s the value of group travel.
There’s a growing need for new travel buyers in our industry. How is your organization planning to reach new buyers, and how might they be different from the typical buyers we’re used to seeing?
Assante: Our buyers are educators, and we’re seeing a shift from the traditional, older male teacher to a younger, more diverse group of educators. Many of them rely on technology instead of face-to-face meetings. They’re harder to reach, and they use social media to gather information and referrals. So, our members are constantly trying through email and social media to reach educators. Technology is a really important part of the sales process now.
We have seen a lot of new tour companies after the pandemic. Teachers thought about whether they wanted to keep teaching in a classroom, and many of them started travel companies so we have had our best growth ever in tour operator memberships.
Pantuso: If I had a plan, I wouldn’t share it publicly, because that would be the golden egg. The question is, who are the buyers that are out there? We spend a fair amount of time internally trying to work with our members to find the new buyers. We want to go beyond the traditional tour operator or coach operator. There are a lot of other people out there sending people in groups, but they’re not tours.
Prather: We have identified a number of paths for new buyers, and we’re looking at ways to redefine the traditional tour operator. We want operators who exemplify our mission and core values. We do have to be open these days, especially after COVID and the entrepreneurial spirit that followed. There were a lot of new businesses that came on board.
It’s so encouraging that everywhere you look there is wide-ranging diversity. I do think our industry is open, and I hope our industry will be one of the first to be as diverse as the world around us. And a lot of that goes back to staffing — ensuring the jobs we offer are well paying jobs that have a path forward and attract diverse audiences.
Dale: This was a key topic at our recent board meeting in Seattle. I don’t have the answers at the moment, but we’re sensitive to the fact that we need new buyers. Even though business is strong right now, we have to figure out what the channel is and how we work with it. The travel advisor will continue to be key to our success. But we are sensitive to the fact that we need a pipeline of these new buyers, and we’re going to figure it out.
Environmental issues are a growing concern among many Americans, especially millennials and Gen Z. How can the tourism industry, which is fundamentally energy-intensive, take meaningful steps toward sustainability?
Pantuso: On our website, we have a study we have done twice now. It shows motorcoach travel as being the most environmentally friendly form of transportation when measured on a per-person basis. There’s no cleaner way to travel than by putting 30 to 50 people on a motorcoach. So, we have a great story to tell — we just have to do a better job of telling it.
When you look at the engine requirements put in place by the EPA, with the low-sulfur and low-emissions fuel that’s now required, and the continuing upgrade of new technology, there are places where the air coming out of the engine is cleaner than the air going in.
Assante: We are looking at it from the responsible traveler perspective and hoping to educate our younger travelers on the impact of their trip on a destination — how to interact with local communities and how to engage and be responsible while in another person’s community. That can include things like being aware of how loud you’re talking and the kind of language you’re using. Should you ask someone for permission to take their picture? That’s being sensitive to the places they’re visiting.
Dale: I believe we’re the only association in the U.S. that has done two totally dedicated sustainability summits, both of which took place in Norway. Next year we’re going to do it in Singapore. I think that demonstrates how we need to address sustainability. What came out of the first Sustainability Is Responsibility Summit was that there were actionable items that our members could implement. Some of them differ from member to member. But our goal is for everyone to recognize that their journey is going to be different. Our responsibility is to provide these concepts, and they can take them and apply them to their companies.
Prather: NTA learned from a recent survey that 97% of our tour operators and clients are seeking more meaningful travel experiences. They define this as connecting with local communities, supporting local businesses and leaving a destination better than they found it. We have worked on playing that back to our operators, suppliers and DMOs.
I always try to talk about Tourism Cares, because I think they have an important role to play in sustainability and meaningful travel. People can use them as a resource. They have the Meaningful Travel Map, and I hope suppliers and DMOs will work to get those kinds of experiences on the map. Growing that will help tremendously.