The package tour – model with a future?

At the TIC networking event “Package tour – model with a future”, Dr. Markus Heller, Managing Partner of Dr. Fried & Partner, had the opportunity to discuss the future of package tours with industry experts Ralph Schiller (Group Managing Director FTI Group), Christoph Führer (Managing Director Leitner Touristik), Georg Ziegler (Director of Content Marketing HolidayCheck), Marija Linnhoff (Chairwoman VUSR) and Alexander Holst as a member of the Young TIC.

Even though the discussion was quite controversial in parts, some aspects can be highlighted which speak for the fundamental continuation of the package tour or the organised trip.

The new customer is better informed today and therefore has clear expectations of the package tour booked. In addition to the convenience of the booking process, a good price-performance ratio and a direct contact person on site are important to him. Especially due to the Thomas Cook insolvency customers tend to be more cautious. However, this is not so much a matter of a security certificate, but rather a “guarantee of success” that the long-awaited holiday will actually take place.

Tour operators are increasingly noticing that the younger target groups are less and less likely to take package tours. Especially the Millenials are looking for adventure, individuality and spontaneity. The motto is: “The journey is the destination.” It is therefore difficult for a tour operator to score points here with a standardised package tour. On the other hand, from the age of 30 onwards the package tour plays a more important role again. In the target group of young families – especially those with increasingly higher household incomes – aspects such as security, advice and convenience are then again in the foreground. Attributes that are very well covered by the package tour.

The package tour is now highly flexible. The customer can combine a hotel individually with a flight, regardless of destination and day. The tour operator thus offers the customer an almost infinite number of possible combinations for travel packages tailored to his wishes. However, this is only one side of the coin, as not every customer wants to put together his trip creatively and elaborately. With the approach of mass customization, especially large tour operators can exploit their economies of scale and produce a multitude of quasi-individual travel combinations from a richly stocked warehouse.

It is also possible to operate profitably in a highly competitive and low-margin tour operator market. But there is no one, right strategy. Over the past few years, a number of, in part, large tour operators have shifted their value creation towards destinations and are generating relevant profits with their own DMCs and hotel chains. But small and medium-sized tour operators with an asset-light strategy can also generate good profits if they have a very good understanding of their target groups and occupy niche markets with high-margin products. It is also to be expected that the currently still relatively low barriers to market entry will be raised if, against the backdrop of insolvency protection and rising service costs, the cost price and production costs assume sensitive dimensions.