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Tips for Managing Growth in a Booming Industry

Several years of surging sales have put the tourism industry in one of its strongest positions in recent decades. But with success comes a new set of issues to navigate, including rising prices and overcrowding in popular destinations. And continued social unrest and unpredictable government policy changes have travel professionals hedging their bets for the future. The Group Travel Leader spoke with the heads of four tourism industry associations to get their perspectives on these issues and how their members are innovating to overcome them.

Carylann Assante, Executive director, Student and Youth Travel Association (SYTA)

Terry Dale, President and CEO, United States Tour Operators Association (USTOA)

Pam Inman, President, NTA

Peter Pantuso, President and CEO, American Bus Association (ABA)

There has been some social unrest and unfortunate accidents in a number of popular international destinations this year, as well as some significant changes in U.S. foreign policy. Is any of this affecting people’s travel preferences?

Dale: All of this doesn’t seem to be diminishing people’s desire to travel globally. But it does impact where they travel. Everything is cyclical. It’s good to see travel to Egypt coming back with strong numbers. But there are other places and pockets that are suffering, whether from geopolitical issues or Mother Nature.

The new policy on travel to Cuba has affected our members. The ability to travel under the People-to-People license through the Office of Foreign Asset Control is no longer an option. However, that doesn’t mean that travel to Cuba has stopped. It just means that we need to adapt to Support of the Cuban People, which is a program we can operate in. It’s more complicated today. But once we go through the exercise of figuring it out, which our members are doing, there is still the opportunity to do business in Cuba.

Assante: SYTA will be releasing the results of its new Student Travel Business Barometer, which will provide a quarterly forecast on student travel. The first quarter included questions on tour operators’ perspective on safety and crisis management. We see that 75% of our tour operators have prepared a crisis management plan in the past 12 to 24 months, and over 50% of them have implemented new safety procedures.

Last year, we saw a slight decrease in student travel to the United States and England and an increase to Canada and Ireland. These countries are perceived as more welcoming. But in the first quarter of 2019, we are seeing an increase in student travel to the U.S. again.

Pantuso: Social unrest and accidents always have a tempering effect on travel to the affected regions. If anything, people tend to shift their travel patterns.

Over time, if nothing else happens, people say, ‘Yeah, I’m going to go there.’ People didn’t stay away from Paris long after the bombing there. I was there weeks after it happened on a river cruise. We saw a little more of a police presence than the last time we were there, but it didn’t stop us from going. We live in D.C., and we’re always a target for somebody. But we don’t wake up thinking about that every single day.

Inman: There are many travelers who are choosing not to travel to the U.S. and, instead, are going to other countries, so it’s impacting us a bit. I’m on the Department of Commerce Travel and Tourism Board, advising the secretary of commerce on issues that affect our industry. We had a meeting recently where the Department of State talked about opening a new facility in Wuhan, China, for visas. They’re expanding in Shanghai and in India, too.

The Department of Homeland Security is looking at other countries to bring into the visa waiver program. Poland is one they’re looking at very closely. And the Department of Transportation has signed agreements with nine new countries for open skies, so there will be more flights going back and forth.

From hotel room rates to airfares and motorcoach fees, prices seem to be rising steadily throughout the travel industry. Is this a benefit or a challenge to your members? And how is it affecting consumer appetites for leisure travel?

Pantuso: I don’t have any member in any category that would suggest that higher rates are a bad thing for them. Now, does it create challenges? In terms of planning and attracting customers on a tour, it can. But it doesn’t have to. The customer is willing to pay for value, and I believe that people are willing to pay for quality. So for me, it’s not about rates — it’s about perceived value and what you’re getting for the money.

Will a hotel room increase from $150 to $160 really slow people down? Probably not that much. People who are sensitive to a $10 shift probably aren’t traveling.

Inman: The challenge is that our members prepare their tour packages so far in advance. They try to lock in their rates, but they can’t lock in everything, so that has become more challenging. Some of our tour operators are saying it’s cheaper to go overseas than Boston, New York City or D.C.

We also have all the issues going on at the national parks, with the new program supposed to go into effect on October 1. We have a coalition that meets with the park service to help them understand how tour operators do business because it’s obvious that they really don’t understand. We’ve been working on this for years, and the deadline is looming, so we hope some changes will be made that won’t be negative for our tour operators.

Dale: It’s a challenge because it means that packaged travel ultimately becomes more expensive. The consumer bears the brunt of these increases. We’re not seeing that it’s going to have a dramatic or adverse impact, but it costs more these days to travel.

We went into 2019 with a very robust forecast. Our members were thinking that this could be a banner year. But we have found consumer confidence wavering a bit. Wall Street was hiccupping a bit, and sales weren’t as strong as we anticipated in the first quarter. It’s still going to be a good year but not as strong as we initially thought.

Assante: This is a challenge for our members and their customers, who are middle school and high school students. Many of them have to fundraise to pay for their trips, and in some cases, families are forgoing their vacations so their students can take these trips.

We see tour operators reducing the number of days on the road, trips going from four nights to three. And they’re finding creative ways to feed students and researching authentic, less-expensive attractions. They may be selecting to visit higher-priced destinations every other year and selecting secondary cities as more affordable options.

Who are the key innovators in packaged travel today? How are your members interacting with them, and how are they impacting the way people travel?

Inman: Our tour operators, in order to stay relevant, have to reinvent themselves. So more than 50% of our tour operators now do FIT. So I think about leaders like our chair, Paul Larsen. He says he never even thought about doing some of the places he’s doing now, but he met them at Travel Exchange and they gave him a good package. Jay Smith does sports travel, and he brings a lot of unique ideas. He’ll do a Super Bowl package where everyone’s staying in the same hotel and has the same transportation, but they’re not treated like a group. It’s an interesting way to do packaging.

Dale: I want to talk about Tourism Cares. They worked with Jordan in 2018 to put together the Meaningful Travel Map, a collection of social enterprise cooperatives. To me, that innovation and utilizing those resources is groundbreaking. That, to me, is the future, and that’s how our members integrate and spread out our economic impact more broadly — by getting our dollars into the hands of entities that benefit from those dollars. The Meaningful Travel Map is the future, and it’s why we need to support Tourism Cares in this expanded and evolving mission they’re adapting.

Assante: We are all innovators. Because of social media, we can all share authentic experiences and all learn from each other. I can’t point to one person or company that’s driving the change.

Pantuso: There are a lot of people looking at how the traveler is changing. They’re more demanding, younger, and they want to be more active than the prior generation in the same category. That individual is much more connected and engaged on social platforms. So the innovators are putting themselves in the mindset of that customer. The larger operators have more capacity because of their depth of knowledge and research about customer spending patterns. So a lot of folks in the industry follow what the larger companies are doing.

I also hear countless anecdotal stories about people who experiment and add new things to their trips. Those who are focused on the customer — and serving the customer — are the most innovative.

Many people believe that major tourist destinations around the world are becoming overcrowded. What are your members doing to deal with the crowds now, and what can the travel industry as a whole do to address the situation in the long term?

Assante: The student travel industry is somewhat limited in when they can travel, as travel dates are determined by school year calendars, school testing dates and spring breaks. So they often are traveling when lots of other students are in popular destinations, like D.C., New York, Paris or Florence. But we have seen an effort to work with educators to change dates to take advantage of lower rates during shoulder season or off-peak periods. Another factor they may consider when looking at overcrowded destinations is the safety and risk management factors and how to manage students during these peak periods.

There are so many wonderful and undiscovered destinations, attractions and experiences in the world. As an industry, we can build awareness of them and work together to share them through social media, word-of-mouth and even through our own travel. Try something new.

Pantuso: New York City right now is looking at implementing a congestion pricing program to reduce traffic and congestion. I don’t see that as a tourist problem — it’s a problem of size, space and the number of people who live there. But it has an impact on travelers in the city. The same thing is happening in D.C. The council is looking at the possibility of doing some kind of congestion pricing scheme.

I’m hearing our tour operators talk about changing times a little bit. School groups come here [Washington] by the tens of thousands in the springtime — March, April, May and early June. More and more operators are beginning to work with schools to have the same experience in February. They get lower rates, and it’s a lot easier to get around. You cover more ground in the same period of time. They’re trying to shift the time of year or even shift the time when they visit a particular venue. Go see something at night instead of going from nine to five when all the other groups will be there as well.

Inman: What the operators are doing is looking at some of the lesser-known sites and starting to package things that are just as intriguing, beautiful and interesting, but off the beaten path. Or they’re choosing shoulder season to do their packaging.

Sustainability is very important. We have a speaker coming to Travel Exchange who is going to talk about how tour operators can make sure their tours are more sustainable as their visitors come into an area. Some of them will use public transportation in a city rather than their own transportation. So they’re trying to do things to alleviate any damage done.

Dale: We’re in the process of putting together our next five-year strategic plan, and sustainability and overcrowding will become a central focus for how we adapt and make sure we don’t destroy an industry. Our members today are talking about places like Machu Picchu. If we know that Tuesday through Thursday are peak days, how can we structure our itineraries and experiences to go in shoulder season or not on those prime days? Or in Dubrovnik, there are six cruise ships in port on a particular day, so let’s structure our itineraries so we’re not adding to the overcrowding.

We’re having success, but how do we manage our success? We believe that through the DMO [destination marketing organization] community and partnership we have with them and the government, which needs to be in this conversation, we can be responsible in managing this success. Our membership is sensitive to the fact that they need to do some coordinating, planning and collaboration. It’s not going to be easy because it’s a big issue. But we need to be part of that conversation.

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