What You Need to Know Before Starting a Tour Operator Business | Orioly

What You Need to Know Before Starting a Tour Operator Business

Are you thinking about starting a tour operator business?

If you are reading this article probably your answer is yes. In this case, keep in mind that running this kind of business goes beyond designing tours and guiding tourists through your location.

In order to be a successful tour operator, among other things, you need to know your location very well, have a deep connection with the local community, and love to deal with people above all else.

After all, your future guests will be looking for a memorable experience when booking with you.

So, my first advice would be, make sure that you have enough passion and love for it.

Before heading to the tips on how to start a tour operator business, it’s important to have an overview of this segment.

Important stats on the tours and activities segment

tourists boat asia starting a tour operator business

Let’s start from the basics, do you really know what is a tour operator?

Here you go a definition given by AITO — The Specialist Travel Association:

A Tour Operator is a person or company that thinks up ideas for holidays, researches the ideas, designs the holiday itinerary and content, contracts the services needed for the holiday, accommodation, transport, guides, tour leaders or resort reps etc and then markets the resultant package.

Tours, activities and attractions is the third largest sector within travel, right behind airlines and hotels, according to an Arival report from 2019.

There are more than 130 distinct categories of tour operators! Adventure tour operators, safari tour operators, sightseeing tour operators, food tour operators, just to name a few.

The travel activities market was expected to reach $183 billion in 2020. Of course the pandemic had a direct impact on this forecast. Anyway, this sector has everything to continue growing as soon as confidence in travel rises again.

Talking about booking, most travelers find and plan activities through their computer, and more than 20% book it online, directly on the tour operator’s website.

By the way, the average number of activities per trip is 7, that’s quite a lot, isn’t it?

That’s why when planning your website you should consider integrating an online booking solution. Otherwise, you will be losing an important source of income for your business.

Now that you are better informed about the tours and activities industry, let’s see what you need for starting a tour operator business.

Skills that you need before starting a tour operator business

woman meditating desert starting a tour operator business

It’s time to find out if you have what it takes. While starting a small tour company does not require any professional qualifications, the following skills are incredibly important for anyone who wants to open a new business.

  • Ability to deal with uncertainty and unplanned
  • Ability to handle pressure (which is connected to the first one)
  • Awareness of emerging trends

It comes without saying that the entrepreneur needs extensive knowledge about visa regulations, immigration procedures, places of tourist interests, political situations, accommodation and transportation trends, festivals, history and culture, and all other aspects regarding the tour business.

First steps to run your tour operator business

woman planning business starting a tour operator business

Besides all the knowledge and soft skills previously mentioned, you need a lot of planning and strategy if you want to start a successful tour operator business.

Below we listed some key actions you need to take in order to get there.

Identify your niche

Finding a promising niche is not an easy task. Answering these questions will help you clear your mind.

What do you want to show to your guests? What activities do you want to offer to keep them entertained? How can they experience something authentic on your destination that you can organize?

And the most important: 

What would make a potential guest booking with your company?

Tour operators can offer overseas cultural tours, domestic sightseeing tours, adventure or nature tours, or any other niche.

Another type of specialization is the budget tour operator catering to the price-conscious, or the luxury tour operator catering to people who value experience over money.

Take your geographical location into account. Local tourist attractions are good indicators of what would and would not work for your business.

For example, if you are based in a remote area full of vineyards and wineries, then offering wine tours is a good idea.

Also, size up the competition by researching the tourism businesses in your area. When starting a tour operator business, you will want to choose a niche that is not overly congested, and one that you can contribute something unique to.

Define your ideal customer

tourist couple street starting a tour operator business

Think about what you can offer that’s different or distinct from your future competitors. Without a clear idea of your target customer, you’ll struggle to cut through the competition.

Knowing your customer is crucial to be able to provide what they like. What’s their age range? Married or single? And so on.

There are tools on the internet that can help you create the persona of your ideal customers.

Make My Persona is a tool that I like for this task. With it you can create a profile of your target customer that will guide your business plan and marketing efforts.

Ask the tour industry leaders

Don’t think it’s a bad idea to ask for advice from someone who has been in your shoes, especially when they have come out successful on the other side.

Use Facebook for that. You can join groups dedicated to tour operators and start conversions that will give you valuable insights to apply in your own business.

Tourpreneur for Tour Operators/Tour Professionals is a great example of a Facebook group where you can ask for advice from industry veterans.

LinkedIn is also a great place to connect with peers. This social media is filled with many travel experts and leaders. I’m sure you can find someone in your area to connect and exchange information.

You can start searching for new connections in our LinkedIn group. Our small community is full of tour operators looking for learning the best business and marketing practices to grow online.

Sit down, do some research about who to contact and what to ask — and start a conversation. You’d be surprised how more than likely people will want to help you out.

Determine your budget and costs

Find out the standard cost factors within the tour and travel industry. Not only it will help you manage your business more effectively, but also investors are interested in it.

The next step is establishing a budget. Once you determine how much money you’ll have to work with, figure out how much it will take to develop your product or service and create a marketing plan.

Finding a business partner is a good idea to share the costs and risks of the new business. This can be decisive whether it will succeed or not.

In addition, a business partner with a different background than yours will bring the operation to another level.

Extra tip: Insurance is crucial for tour operators. When looking for one, be sure to watch out for hidden fees and poor exchange rates.

Write a business plan

notebook pencil notes starting a tour operator business

A solid business plan will guide your steps towards success. It will help you achieve short-term and long-term objectives. Furthermore, it’s also needed for presenting your idea to potential investors and partners.

For that reason, it’s important to have in mind who is the reader of your business plan when creating it. This way you can focus on the key message you want them to receive in order to get the response you want. 

Your business plan should include:

  • mission statement
  • company summary
  • an executive summary
  • service or product offerings
  • description of the targeted market
  • financial projections
  • the cost of the operation

Obtain the necessary licenses & registration

This is more or less self-explanatory. To start a new business, in the tourism sector or not, you should first obtain all applicable local business licenses.

Most countries have a regulatory agency just for that. I’m sure you can find yours by researching on the internet.

It is likely that you will need the following to have your business legalized:

  • requiring a business license from your local county
  • registering a fictitious business name
  • registering the business structure (if it is sole proprietorship or LLC)
  • checking for any zoning ordinance according to the location of your office

Design your product

This is one of the crucial parts when starting a tour operator business.

The first thing you need is a catchy name for your tour. One that will sparkle the curiosity of your target customer to book with you.

Be creative. Use adjectives and words that describe the experience. Also, check for popular terms searched on Google, this will help your marketing later on. Use Google Trends for that.

When creating the itinerary, try to include sights, attractions and historical places. People are very keen to learn about the history behind them.

When possible, make partnerships with locals. They can make part of your tour as an associate guide, being an element of the storytelling or selling traditional products.

Including the local community in your itinerary will help tourists connect with the destination, which is what most of them are looking for on these days.

Recruit the right people

tour guide with tourists starting a tour operator business

It’s only natural that you can’t do everything by yourself. As your tour business grows you’ll have to recruit more people.

To attract the best, you need to sell your vision, which requires a wholehearted belief in what you do. Only hire tour managers who share your values and are committed to giving travelers a great experience.

There are no required qualifications to become a tour manager, but there are many university and college courses in tourism management that could be helpful.

Choose your distribution channels

Online travel agencies (OTAs), your own website, office sales, travel agents, hotel concierges, etc. The list of sales channels for tour operators is extensive.

One tip here is don’t put all your eggs in one basket.

OTAs have higher commissions in general but their enormous marketing budgets grant a big exposure to your products. On the other hand, your website is the cheapest place for online booking, but you need to invest in digital marketing.

Balancing your sales channels, online and offline, direct and indirect, is the best strategy to sell your tours once you will be sharing the cost.

Know your target customer and be present in the channels they use the most.

Market your tour business

Marketing is a big part of a business, and new tour operators should pay attention to it from the beginning. In the early days, digital marketing has grown in importance and you should master it if you want to succeed.

The first step is creating a website for your tour business. Be sure to hire a specialist for search engine optimization (SEO) to maximize your chances of being found on search engines like Google.

Write blog articles regularly and cultivate your social media presence. This is essential to create brand awareness these days.

Other possible ways to attract clients include starting discussions in travel and tourism forums and participating in travel shows and trade fairs.

Listen to the interests of your customers

tourists enjoying beach starting a tour operator business

Once you have become an expert in your niche and you’re looking to expand, look no further than your customers for new ideas.

What kind of services do they want? Where do they want to go? What do they want out of a tour?

Not only will they prove to be a great resource for ideas, but they will also help sell your business for you. Word of mouth is still one of the most powerful marketing strategies.

Conclusion

Stepping into the best part of travel means being open to new experiences, people and a lot of learning.

This article gives you the directions for starting your tour operator business. If you want to establish your presence in your area, it’s very important to continue learning.

Check out our Comprehensive Guide on Digital Marketing in Tourism for 2021. It will help you create a marketing plan that will bring the first customers to your new business.

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